* Dollar recovers, depressing gold from highs
* Investment interest, currencies outlook support gold
* Platinum, palladium, rhodium strike highs
(adds quotes, updates prices)
By Jan Harvey
LONDON, Nov 17 (Reuters) - Gold fell in Europe on Tuesday,
letting some heat out of previous day's rally to record highs,
as the market took a cue from currency fundamentals, tracking
the dollar's rally from 15-month lows.
But while technical chart signals suggested the market
looked overbought, analysts said the metal was still well
supported above $1,130 an ounce.
Spot gold <XAU=> stood at $1,131.30 an ounce at 1300 GMT,
against $1,139.05 late in New York on Monday. It touched a
record high of $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.
"The uptrend is definitely firmly entrenched. $1,100 has
proven to be a bit of a base," said Ole Hansen, senior manager
at Saxo Bank.
"Technically, it's very overbought...indicating a period of
stable prices or a bit of a setback before it gathers strength
to make new highs," he added.
Platinum group metals also lost traction in line with gold
as the dollar firmed, retreating from multi-month highs.
In an update of its Platinum 2009 report, major refiner
Johnson Matthey said platinum prices could top recent 14-month
highs to hit $1,550 an ounce in the next six months if
investment demand added to a recovery in car sales.
[]
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 on Tuesday after gold hit
a fresh record high, 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
have risen, 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
$18.18 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 and was later at $1,431.50 versus $1,441.00.
Palladium <XPD=> hit a 15-month high of $375.70 before easing
back to $368.00 an ounce versus $373.00.
Fellow autocatalyst material rhodium <RHOD-LON> reached a
13-month high of $2,425.
(Additional reporting by Veronica Brown; Editing by James
Jukwey)
