* Dollar index makes up lost ground after year-low
* Physical demand lacklustre as prices rise
* Base metals slide adds to pressure on silver
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, Sept 14 (Reuters) - Gold prices fell more than 1
percent to below $1,000 an ounce in Europe on Monday, giving up
the previous session's gains, as the dollar strengthened in
response to a decline in stock markets.
Other precious metals tracked gold lower, with silver and
platinum both retreating from the multi-month highs they hit on
Friday.
Spot gold <XAU=> hit $994.50 an ounce at 0912 GMT against
$1,004.85 late in New York on Friday. Earlier that session it
hit an 18-month high of $1,011.55 an ounce as the dollar fell.
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange fell $10.30 to
$996.10 an ounce.
David Wilson, an analyst at Societe Generale, said gold was
suffering from a recovery in the dollar and its technical break
higher through key resistance levels was running out of steam.
"I think we'll settle back to a lower range, with support
around $960 an ounce," he said. "India's jewellery demand has
dropped off again, showing weaker physical demand, while there
hasn't been any momentum from ETFs."
Inflows into gold exchange-traded funds have tailed off
since record levels of buying in the first quarter. The largest,
New York's SPDR Gold Trust, said its holdings were unchanged on
Friday for a fifth session. []
The dollar <.DXY> rose against a basket of currencies on
Monday as risk appetite retreated, with equity markets falling
in Asia and Europe, and investors worried about a trade dispute
between the United States and China. [] [] []
A firmer U.S. currency typically weighs on gold, as the
precious metal is often bought as an alternative to the dollar.
Last week the dollar's slide to one-year lows against a currency
basket sparked a rise back above $1,000 an ounce.
Like all dollar-priced commodities, gold also becomes more
expensive for other currency holders as the U.S. unit firms.
Commodities fell on Monday, with oil slipping nearly 1 percent
to below $69 a barrel and base metals tumbling. [] []
VULNERABLE
With physical demand for gold weak as high prices deter
buyers, the importance of speculative interest in New York gold
futures to the current price rise is worrying some market
watchers, who say prices are vulnerable to a correction.
UBS analyst John Reade said a report released on Friday that
long positions in COMEX-traded gold increased 6.4 million ounces
in the week to Sept. 8, the fourth largest rise since its
records began in January 1996.
"Looking at the previous occasions when the net speculative
long positions increased by more than 6 million ounces in a
week, the average decline in gold over the following four weeks
was 5.1 percent," he said.
"Considering the speed of the increase and on the absolute
level of the net speculative position, we are cautious about the
near term outlook for the gold price."
Among other precious metals, silver <XAG=> was at $16.32 an
ounce against $16.74, as a decline in base metals added to the
downward momentum sparked by falling gold prices.
Platinum <XPT=> was at $1,297.50 an ounce against $1,315.50,
while palladium <XPD=> was at $289 against $290.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
