* Dollar weakness triggers gold, commodity rally
* Platinum ends off 11-month low but stays in red
(Recasts, updates prices, market activity to close; adds
second byline, dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 19 (Reuters) - Gold ended higher on
Monday as U.S. dollar weakness prompted broad gains in
commodities, but platinum finished lower after hitting an
11-month low during Asian trading.
Traders said gold was forming a new base that could result
in more gains.
Gold was at $810.70/811.90 by New York's last trade at 2:15
p.m. EDT (1815 GMT), up from $799.65/801.05 its U.S. market
close on Monday. The precious metal started the session lower,
slumping to a session low of $782.05.
The dollar weakened across the board as U.S. stocks dropped
and investors took profits on the greenback's recent steep
gains. [] The dollar's slump triggered
a broad-based rally in commodities and crude oil.
Strengthening oil prices also made gold more attractive as
a hedge against inflation. U.S. crude futures <CLc1> ended
$1.66 higher at $114.53 a barrel. []
Carlos Sanchez, precious metals analyst at CPM Group in New
York, said the gold market was trying to build a base between
$780 and $800, and could move in a range in the near term.
In the morning, the U.S. government said the Producer Price
Index, a gauge of wholesale prices, shot up in July at the
fastest year-on-year rate since 1981. []
After the report, bullion was pressured as the dollar
strengthened on hopes that the U.S. Federal Reserve would raise
interest rates. But lingering inflation fears can boost gold.
"If we have another high CPI and PPI over the next several
months, it will definitely help gold," Sanchez said.
U.S. gold futures for December delivery <GCZ8> settled down
$11.10, or 1.4 percent, at $816.80 an ounce on the COMEX
division of New York Mercantile Exchange.
"I think there is still a lot of concern about the
financial system as well, and that's contributing to gold as a
safe haven," said Bruce Dunn, vice president of trading at New
Jersey-based Auramet Trading.
Dunn said gold was boosted by a combination of rising oil
prices, a weaker dollar and better physical demand.
"We are seeing extremely strong jewelry demand over the
last week, much stronger than I have seen before," noted UBS
analyst John Reade.
PLATINUM GROUP SLIDES
Platinum and palladium came under pressure from fears that
slowing economic growth could dent demand from the automotive
industry, which consumes more than half the world's platinum.
Both metals remained lower after dropping more than 6
percent in Asia, with benchmark Tokyo platinum futures falling
by their daily limit to a one-year low, as traders worried
about the outlook for demand from carmakers.
"Platinum closed in New York last night around $1,390 and
this morning we hit a low below $1,300," said Afshin Nabavi,
head of trading at MKS Finance. "That was the main reason for
everything else coming off quite sharply."
Spot platinum <XPT=> was at $1,347.00/1,367.00 against
$1,386.00/1,406.00 an ounce late in New York on Monday, having
earlier touched a session low of $1,296.50, its weakest level
since Sept 2007.
Investment bank Investec cut its third-quarter price target
for platinum on Tuesday to $1,660 an ounce from $2,050 an
ounce, and sliced its full-year market deficit to 194,000
ounces. []
Among other precious metals spot palladium <XPD=> fell to
$280.00/288.00 an ounce from $283.00/291.00 an ounce.
Silver <XAG=> slipped to $13.14/13.20 an ounce from
$13.07/13.13 an ounce, having earlier touched a low of $12.45.
(Editing by David Gregorio)
