* Dollar climbs after Fitch downgrades Greece credit rating
* HSBC lifts 2009, 2010 gold price forecasts
* Chinese November car sales almost double
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, Dec 8 (Reuters) - Gold prices extended losses,
dropping 1.2 percent in Europe on Tuesday to a session low of
$1,142.30 an ounce, as the dollar strengthened against the euro
after Fitch downgraded Greece's credit rating.
Spot gold <XAU=> hit a low of $1,142.30 and was bid at
$1,146.30 an ounce at 1353 GMT, against $1,156.90 late in New
York on Monday. In that session it fell to a two-week low of
$1,135.80, having touched a record $1,226.10 on Dec. 3.
Afshin Nabavi, head of trading at MKS Finance in Geneva,
said the metal was being influenced by the dollar, and had moved
sharply after breaking through key technical levels which
triggered automatic selling.
"There were some stops below $1,150," he said. "(Gold) seems
to be trading in a range $1,135 -1,165."
The dollar strengthened against the euro on Tuesday as the
single currency was weighed down by concerns about Greece's
fiscal health after Fitch downgraded the country's credit
rating. []
Strength in the U.S. unit boosts gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
An unexpected 1.8 percent month-on-month fall in Germany's
industrial output in October also weighed on the euro, while
persistent concerns about Dubai's debt woes pushed investors to
seek the safety of the dollar.
Commerzbank analyst Eugen Weinberg said gold remains
vulnerable to a recovery in the U.S. currency.
"Should the dollar strengthen in the coming days, it would
be very difficult for gold prices to hold at current levels,
because it would take one of the most important arguments (for
buying gold) away from the market," he said.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell $16.50 to
$1,147.50 an ounce.
FORECASTS RAISED
HSBC raised its gold price forecasts for 2009 to $990 an
ounce from $925 previously, and said it sees prices at $1,150 an
ounce next year, against $950 previously.
"Ongoing accomodative U.S. monetary and fiscal policies may
lend further support to gold," the bank said in a note.
Elsewhere, an official Chinese newspaper said on Tuesday
China should increase the proportion of gold in its foreign
exchange reserves to ensure the safety of its overall portfolio.
[]
Expectations for further central bank diversification into
gold is supporting investment in the metal, analysts said, and
the recent price dip may encourage this.
Among other precious metals, silver <XAG=> was bid at $17.89
an ounce against $18.16, platinum <XPT=> at $1,435 an ounce
against $1,438.50 and palladium <XPD=> at $372 against $371.
Traders in autocatalyst materials platinum and palladium are
looking for fresh signs of recovery in the beleaguered
automotive market for clues as to the future strength of demand.
Official data on Tuesday showed China's passenger cars sales
in November rose 98 percent from a year earlier. []
(Editing by James Jukwey)
