* Dollar inches up as equities slip after run higher
* Palladium holds below 10-1/2 mth high after car sales data
(Updates prices, quotes, background)
By Jan Harvey and Catherine Bosley
LONDON, Aug 4 (Reuters) - Gold hovered below $955 an ounce
on Tuesday, holding off the previous day's seven-week high, as
the dollar firmed a touch against a basket of currencies, with
weak stock markets and physical demand also weighing on prices.
Platinum and palladium also retreated from the highs they
hit on Monday after better-than-expected U.S. car sales data
boosted hopes demand for the autocatalyst materials may revive.
Spot gold <XAU=> was bid at $951.35 an ounce at 1204 GMT,
against $955.55 an ounce late in New York on Monday. In that
session, the metal hit a seven-week high of $962.10.
"The weaker dollar.... has been the main driver," said Ole
Hansen, senior manager at Saxo Bank. "The interesting bit is how
the dollar will do from here."
Dollar weakness boosts investors' appetite for hard assets
such as gold, as well as making the precious metal cheaper for
holders of other currencies.
Gold prices came under pressure as the U.S. dollar <.DXY>
edged up against a basket of currencies, with gains in equities
prompting profit-taking in higher-yielding currencies. [].
European stocks <> edged lower on Tuesday after the
previous day's nine-month peak, while U.S. stock futures fell as
traders feared the recent run-up was overdone. [] []
Given weak underlying demand for gold and strong technical
pressure, prices were likely to experience heavy pressure above
$960 an ounce, analysts said.
"The trend that we've seen from the highs established this
year is going to create some pretty serious resistance around
the $980 area," Hansen said.
Inflows into gold-backed exchange-traded funds were weak
last month, with holdings of the largest, New York's SPDR Gold
Trust <GLD>, easing 4 percent. []
FESTIVAL DEMAND
Gold-buying in India, the world's largest bullion market
last year, began to pick up as traders prepared to meet festival
demand, but demand was muted by higher prices. India's festival
season starts on Wednesday with Rakshabandhan. []
Among other precious metals, silver <XAG=> was at $14.11 an
ounce against $14.21. Platinum <XPT=> was at $1,226.50 an ounce
against $1,232.50, while palladium <XPD=> was at $269 against
$269.50, down from the previous session's 11-month high of $273.
Platinum and palladium rallied in New York trade on Monday,
lifted by news that U.S. auto sales jumped to a 2009 high in
July, as Americans took advantage of a $1 billion incentive
scheme to scrap their old cars. []
But James Steel of HSBC Securities said the U.S.
government's car scrappage plan was likely to cap the rise of
platinum group metals (PGMs).
"The success of the `cash-for-clunkers' program... is also
boosting the amount of recycled PGM scrap that will eventually
be made available to the market," Steel wrote in a note. "This
may help cap gains in the PGMs."
The United States is primarily a market for gasoline cars,
which use a higher proportion of palladium than platinum in
their catalytic converters.
(Editing by William Hardy)
