* Dollar extends losses vs euro after U.S. retail sales data
* Precious metals hold gains after earlier bounce
* Traders await news from Lehman for impact on dollar
(Recasts, adds comment, detail, updates prices)
By Jan Harvey
LONDON, Sept 12 (Reuters) - Gold held onto near 2 percent
gains posted in early trade on Friday, as the dollar extended
losses against the euro on weaker-than-expected U.S. retail
sales data.
Other precious metals also bounced back after Thursday's
sharp losses, with platinum rising nearly 5 percent, palladium
gaining 6 percent and silver ticking up almost 3 percent.
Spot gold <XAU=> rose to $754.10/755.30 an ounce at 1331 GMT
from $739.60/741.20 an ounce late in New York. Earlier it
rallied more than 2 percent to a session high of $757.90.
"Today the slightly weaker U.S. dollar is supporting the
gold market," Saxo Bank global products manager Philip Carlsson
said.
The dollar fell further against the euro after data showed
U.S. retail sales fell for a second straight month in August.
[]
It had already eased from highs in earlier trade as a more
optimistic view of investment bank Lehman Brothers' future
prompted currency traders to cash in on recent gains.
Gold typically moves in the opposite direction to the U.S.
currency, as it is often bought as a currency hedge. Traders are
awaiting further news on Lehman later in the day, amid
speculation the bank may be planning an announcement.
Gold also is being helped by a pick-up in crude prices. Oil
rose over $1 a barrel on fears Hurricane Ike could affect
production in the United States, the world's biggest energy
consumer. []
DOWNWARD RISK
Analysts remain cautious over the outlook for gold. Although
the dollar is softening, overall the U.S. unit is expected to
trend higher.
"There is some support around the $750 level. However, I see
no evidence that the downtrend in the gold market has come to an
end," Saxo Bank's Carlsson said. "The outlook for a stronger
U.S. dollar will keep the pressure going."
Traders say they have seen firm demand for gold coins, bars
and jewellery, but changing expectations for gold's price
outlook are affecting buying.
"Physical demand increased again around the $750 levels, but
a lot of customers expect a bigger (price) drop in the future,"
senior Commerzbank trader Michael Kempinski said. "Some
customers are looking for $700."
Among other precious metals, platinum and palladium both
bounced up after recent losses, as analysts suggested the metal
may have been oversold.
Platinum has dropped 14 percent since last Friday, and is
more than 50 percent below the all-time high of $2,290 an ounce
it hit in March.
Palladium also has shed 9 percent of its value since last
Friday, and touched a near three-year low of $212 on Thursday.
"Platinum prices have come under pressure as the market
focus has switched from supply-side issues to demand weakness on
the back of slower vehicle sales," said Barclays Capital.
"However, in our view, the power problems in South Africa
are far from resolved and leave platinum supply susceptible to
disruptions."
Spot platinum <XPT=> was at $1,177.00/1,197.00, up from
$1,126.50/1,146.50 late in New York, having earlier hit a
session high of $1,182. Palladium <XPD=> climbed to
$238.00/246.00 from $226.50/234.50.
Spot silver <XAG=> was at $10.65/10.71 against $10.43/10.51.
(Reporting by Jan Harvey; Editing by Michael Roddy)
