* Dollar loses early shine to gold, snaps 2-day gains
* Fed officials sound in no hurry to tighten
* Euro broadly firmer as ECB talks tough to banks
By Kevin Yao and Wayne Cole
SINGAPORE/SYDNEY, Nov 23 (Reuters) - The U.S. dollar
drifted lower against the euro and other major currencies on
Monday, losing its shine to a surging gold price and more
dovish comments from U.S. central bankers.
Gold rose more than 1 percent to a fresh record high on
Monday as concerns about accelerating inflation and weak
economic growth prompted investors to seek relatively safer
assets, while supply concerns boosted oil and copper.
Sue Trinh, senior currency strategist at RBC Capital
Markets in Sydney, said she expected dollar weakness to
continue until U.S. Thanksgiving holiday starting Thursday.
"The market is probably caught long on the dollar following
the move on Friday, which was a false break," she said. "Gold
is very will bid and commodities are all rallying.
The dollar has been on a steady decline since March as
signs of a global recovery prompted investors to favor
higher-yield currencies and assets.
It has staged a modest rebound in recent weeks, but
analysts generally believe it will lose further ground in the
near term due to expectations that U.S. interest rates will
remain at record low levels into 2010.
Spot gold <XAU=> was trading around $1,162 an ounce, having
hit a peak around $1,164, up a third so far this year.
Against a basket of currencies the dollar <.DXY> dropped
0.5 percent to 75.276. On Friday, the dollar index rose as high
as 75.879 -- its second straight daily gain -- as risk
tolerance declined, with investors cutting exposure to riskier
assets.
The euro <EUR=> hopped to $1.4935, reversing an early slip
to $1.4834 and matching Friday's high at $1.4935.
HURT BY FED COMMENT
Traders said the dollar had initially tried to extend last
week's short-covering rally but ran into selling from Asian
sovereign accounts just as gold streaked to a record high.
It was also hit by comments from St. Louis Federal Reserve
President James Bullard that the central bank should keep alive
its mortgage-related assets purchase programme beyond a planned
end-date to give policy-makers more flexibility.
In addition, the Financial Times had an interview with
Chicago Fed President Charles Evans in which he suggested
interest rates would not be lifted for a long time to come,
maybe late 2010 or even 2011.
Those comments came in contrast to comments on Friday from
European Central Bank President Jean-Claude Trichet that banks
risked becoming addicted to easy money. Trichet said he would
make sure that extraordinary liquidity measures would be phased
out in a timely and gradual fashion.
"The Fed is sounding like they mean it about keeping rates
low for an extended period -- way into 2010 if not 2011," said
a trader at an Australian bank.
"That just added to the dollar's offered tone and it
doesn't take a lot of flow to move currencies when the market
is so thin," he added, noting the absence of Tokyo for a
holiday had made conditions illiquid.
Trade was likely to be thin all week given U.S. markets will
be shut on Thursday for Thanksgiving, though the lack of
liquidity could lead to volatile moves.
The dollar was little changed on the yen at 88.90 yen
<JPY=>, from 88.97 in New York, but remains in a gradual
downtrend that stretches back four weeks now. Support was seen
under 88.70, with resistance at 89.10 yen.
Sterling edged up to $1.6514 <GBP=>, from $1.6502 on
Friday, while the Australian dollar bounced to $0.9180, from
$0.9153 <AUD=>.
Minutes of the Federal Reserve's last policy meeting are
due on Wednesday and could repeat the low rates message.
Analysts at Barclays believe the minutes should show the
Fed's reference to resource utilisation and inflation in its
policy statement was intended to underline its commitment to
keeping rates low.
"This language was not meant to signal that the extended
period phrase would soon be removed," they said in a note to
clients. "We expect the FOMC's updated economic projections to
continue to show moderate economic growth and modest
inflation."
Currency bid prices at 0635GMT. All data taken from
Reuters with percent change calculated from the daily U.S.
close at 2130GMT.
Last US Close %Chg YTD % 2008 Cls
-------------------------------------------------------------
Euro/dlr <EUR=> 1.4930 1.4862 +0.46 +2.34 1.4589
Dlr/yen <JPY=> 88.80 88.95 -0.17 -20.24 111.33
Euro/yen <EURJPY=> 132.62 132.23 +0.29 -18.40 162.53
Dlr/swiss <CHF=> 1.0125 1.0176 -0.50 -10.67 1.1335
Stg/dlr <GBP=> 1.6546 1.6499 +0.28 -16.63 1.9847
Dlr/can <CAD=> 1.0643 1.0711 -0.63 +6.81 0.9964
Aus/dlr <AUD=> 0.9179 0.9140 +0.43 +4.82 0.8757
Euro/swiss <EURCHF=> 1.5122 1.5129 -0.05 -8.57 1.6539
Euro/stg <EURGBP=> 0.9023 0.9006 +0.19 +22.78 0.7349
Nzd/dlr <NZD=> 0.7268 0.7233 +0.48 -5.19 0.7666
Dlr/Norw <NOK=> 5.6228 5.6558 -0.58 +3.46 5.4347
Euro/Norw <EURNOK=> 8.3976 8.4030 -0.06 +5.92 7.9283
Dlr/Swed <SEK=> 6.8915 6.9454 -0.78 +6.64 6.4622
Euro/Swed <EURSEK=>10.2946 10.3130 -0.18 +9.16 9.4304
(Editing by Kim Coghill)
((kevin.yao@thomsonreuters.com; +65 6870 3841; Reuters
Messaging: kevin.yao.reuters.com@reuters.net ))
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