* Dollar index remains firm after ECB rates decision
* Euro briefly rises after Trichet but fails to hold gains
* Speculation rife over further cenbank gold acquisitions
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By Jan Harvey
LONDON, Nov 5 (Reuters) - Gold softened on Thursday,
retreating from the record high it hit last session, as the
firmer dollar and disappointment over the metal's failure to
breach $1,100 an ounce prompted investors to cash in gains.
The dollar index <.DXY>, which measures the U.S. currency's
performance against a basket of six others, rose early on
Thursday and held onto gains after the European Central Bank
opted to keep interest rates on hold. [] []
Spot gold <XAU=> was bid at $1,089.70 an ounce at 1455 GMT,
against $1,092.35 late in New York on Wednesday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange rose $2.80 to $1,090.10 an
ounce.
The precious metal reached a record $1,097.25 an ounce on
Wednesday after a pledge from the U.S. Federal Reserve to keep
interest rates low knocked the dollar. But the metal failed to
build on those gains amid fears its rise was overdone.
"The fact that we didn't manage to go through $1,100 might
lead some investors to reconsider their positioning in the
sector," said Commerzbank analyst Eugen Weinberg.
"Should the dollar become stronger over the coming days I
would expect to see more profit taking," he added. "I think...
we will see a prolonged correction, because the trend of the
last few weeks is becoming a bit too pronounced."
The euro briefly turned higher against the dollar after ECB
president Jean-Claude Trichet said the euro zone economy will
recover next year, but failed to hold onto its gains.
Oil prices fell below $80 an ounce after a steep decline in
U.S. crude inventories sent prices up 1 percent in the previous
day. Crude is widely seen as the bellwether commodity. []
CENBANKS EYED
Speculation continued over the prospect of further central
bank gold acquisitions, after India's purchase of 200 tonnes of
bullion from the International Monetary Fund on Monday. The
report helped push gold to record highs. []
Sri Lanka's central bank said it had been buying gold for
the last five or six months as it diversifies its reserves amid
volatile markets. []
A former adviser to the People's Bank of China poured cold
water on the idea that the PBC will buy IMF gold, saying locally
sourced bullion would be cheaper. []
In the physical market, gold traders in India, the world's
biggest bullion consumer last year, reported poor demand as high
prices put off buyers. []
A report showed gold sales in Abu Dhabi fell by up to 30
percent in October on the year, as higher prices continued to
keep consumers at bay. []
Among other precious metals, spot silver <XAG=> was bid at
$17.45 an ounce against $17.44. Holdings of the world's biggest
silver-backed exchange-traded fund, the iShares Silver Trust
<SLV>, fell 3.85 tonnes on Wednesday. []
Platinum <XPT=> was at $1,350 an ounce against $1,364, while
palladium <XPD=> was at $327.50 against $327. The metals, used
mainly in autocatalysts, are both sensitive to car demand.
Toyota Motor Corp, the world's biggest carmaker by sales,
halved its annual loss forecast but failed to convince investors
it is back on track, as government subsidies peter out and a
strong yen takes its toll. []
(Reporting by Jan Harvey; Editing by Sue Thomas)
