* Dollar steadies as U.S. consumption data instils caution
* 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 firmed on Tuesday towards
$960 an ounce as the dollar pared gains against the euro after
U.S. pending home sales data, with strength in other precious
metals helping support bullion prices.
Platinum and palladium held near the highs they hit on
Monday, after better-than-expected U.S. car sales data boosted
expectations demand for the autocatalyst materials may revive.
Spot gold <XAU=> was bid at $958.90 an ounce at 1407 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 stronger euro, stronger platinum group metals and a
lack of follow-through below $951 is bringing in some light
buying," said Afshin Nabavi, head of trading at Geneva's MKS
Finance.
Gold prices came under pressure in earlier trade as the U.S.
dollar edged up against the euro <EUR=>, with falling equities
prompting profit taking in currencies seen as riskier. [].
But the currency pared those gains later in the session
after data showed sales of previously owned U.S. homes rose at a
faster-than-expected rate in June. []
Dollar weakness boosts investors' appetite for hard assets
such as gold, as well as making the precious metal cheaper for
holders of other currencies.
On the wider markets, European stocks <> edged lower
after the previous day's nine-month peak, while U.S. stocks
opened lower after data on June personal consumption and
expenditures instilled caution. [] []
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," Saxo Bank senior manager Ole 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 $14.41 an
ounce against $14.21. Platinum <XPT=> was at $1,233 an ounce
against $1,232.50, while palladium <XPD=> was at $271.50 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 Sue Thomas)
