* Dollar recovers, depressing gold from highs
* Investment interest, currencies outlook support gold
* Platinum, palladium, rhodium strike highs
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, Nov 17 (Reuters) - Gold edged lower in Europe on
Tuesday, giving up some of the gains that took it to record
highs a day before, as the dollar recovered some lost ground,
sparking a correction in commodities prices.
But the metal remains well supported above $1,130 an ounce,
analysts said, with expectations for further dollar weakness and
firm investment interest in bullion as a hedge against inflation
expected to underpin this year's 29 percent gains.
Spot gold <XAU=> was bid at $1,132.15 an ounce at 1019 GMT,
against $1,139.05 late in New York on Monday. It touched a
record high $1,143.25 an ounce that session.
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange fell $6,70 to
$1,132.50 an ounce.
"After yesterday's push we might see some consolidation, but
I think there is probably still a bit more upside left for
gold," said Standard Bank analyst Walter de Wet.
"We continue to see some physical buying interest even at
these levels, as people come in and buy on the dips," he added.
"The investment story remains intact as long as interest rates
are low."
As gold is a non-interest bearing asset, the opportunity
cost of holding it is reduced when rates are depressed.
Opportunity costs represent possible profit shortfalls incurred
by passing up on investments with potentially higher returns.
Gold's chief support has been ongoing weakness in the U.S.
dollar, which slipped against a basket of six other currencies
<.DXY> on Monday after senior Federal Reserve officials said
U.S. interest rates will remain low. []
However, the currency bounced back early on Tuesday, with
the dollar index firming 0.33 percent. This has curbed gold's
appeal as an alternative asset, and also makes all dollar-priced
commodities slightly more expensive for other currency holders.
Oil edged lower after posting hefty gains on Monday, with
traders citing the firmer dollar as a curb on the market, while
base metals also gave up the last session's gains. [] []
CONSUMER DEMAND
Gold dealers in India, the world's biggest bullion market
last year, reported higher scrap sales after gold hit a fresh
record high on Tuesday, but domestic demand abated after a
slight pick-up late in the previous session. []
Consumer demand for gold has been weak this year as prices
rise, but more buying has been taking place among central banks,
who in recent years have chiefly been sellers of gold.
The International Monetary Fund said on Tuesday it sold two
tonnes of gold to the central bank of Mauritius at prevailing
market prices on Nov. 11. []
Reports of the acquisition by India of 200 tonnes of IMF
gold early in November were a key factor driving prices to
record highs above $1,100 an ounce.
"It is clear that central banks are seeking ways to increase
their gold exposure," said Fairfax analyst Marc Elliott.
Among other precious metals, spot silver <XAG=> was bid at
$18.12 an ounce against $18.36. The metal touched a peak of
$18.43 on Monday, its firmest since July 2008.
Platinum <XPT=> matched the last sesssion's 14-month high of
$1,451.50 an ounce was later at $1,439 versus $1,441. Palladium
<XPD=> hit a 15-month high of $375.70 before easing back to
$368.25 an ounce versus $373.
Fellow autocatalyst material rhodium <RHOD-LON> reached a
13-month high of $2,425.
"The changing fortunes of the motor industry, allied to some
investor activity, have been steadily lifting the price of
(rhodium)," said Societe Generale in a note.
"The expectation is that it has considerably further upside
potential," the note added.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
