* Gold pressured by choppy rise in dollar
* Traders cite short-covering for Monday's bullion rally
* Platinum reaches highest in over a year; Ford sales up
(Recasts, updates comments, closing prices, market activity,
adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Jan 5 (Reuters) - Gold prices cut initial
gains to turn lower on Tuesday as the dollar strengthened in
choppy trade following disappointing U.S. home sales data and
dented sentiment in the bullion market.
Platinum and palladium touched their highest in well over a
year on expectations that strong December sales from Ford Motor
Co <F.N> will lift demand. Anticipation of new exchange-traded
products (ETPs) in the United States also boosted sentiment.
A lack of follow-through buying from the previous session's
rally, which was largely driven by short-covering, dragged
bullion prices lower, traders said.
"There was a lot of buying (Monday) as dealers opened new
positions in the beginning of the year, but the early rally has
fizzled," said Mihir Dange, a COMEX gold trader.
Spot gold <XAU=> was at $1,117.65 an ounce at 3:17 p.m. EST
(2017 GMT), against $1,121.00 late in New York on Monday.
Earlier it touched a high of $1,127.70 an ounce.
U.S. gold futures for February delivery <GCG0> settled up
40 cents at $1,118.70 an ounce on the COMEX division of the New
York Mercantile Exchange.
Standard Chartered analyst Daniel Smith said he was
cautious on the outlook for the metal. "Our view is that the
dollar will be more rangebound than it was late last year, and
that will make any upward rallies in gold difficult to
sustain," he said.
The dollar turned higher in a volatile session after a
report showed that U.S. pending home sales fell sharply in
December. []
On the physical market, gold buying in India, the world's
biggest bullion consumer in 2008, continued for a second day on
Tuesday as a strong rupee made the metal cheaper for domestic
traders, dealers said. []
DEMAND RETURNS
Analysts say there are signs that physical demand is
returning as buyers become acclimatized to higher prices.
"Reports indicate that jewelry demand is picking up at these
levels," said Fairfax analyst John Meyer in a note.
New York's SPDR Gold Trust <GLD> reported sales on the
first trading session of 2010, and its holdings dropped nearly
5 tonnes on Monday from the previous business day. []
Silver <XAG=> was at $17.72 an ounce against $17.55 late on
Monday in New York. Earlier it hit a peak of $17.85 an ounce,
its highest since mid-December.
Platinum <XPT=> hit a 16-month high of $1,535.50 and was
last at $1,529.50 an ounce against $1,521, while palladium
<XPD=> reached its strongest level since July 2008 at $424 and
was last at $418 against $418.00.
Ford posted a 33 percent sales gain for December as U.S.
auto sales ended 2009 on an upswing after a tumultuous year
that saw GM and Chrysler collapse into bankruptcy and China
overtake the United States as the biggest car market.
[]
Investors are favoring the platinum group metals, used
mainly in autocatalyst manufacturing, partly due to perceptions
that a recovery in economic growth will lift car demand.
Many also hope the launch of U.S.-listed ETPs backed by
platinum and palladium will open the metals up to a new wave of
investment.
(Reporting by Frank Tang and Jan Harvey; editing by Jim
Marshall)
