* Dollar off highs 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 rose to an eight-week high
above $960 an ounce on Tuesday, helping lift silver by nearly 3
percent, as the dollar pared gains against the euro after U.S.
pending home sales data.
Palladium prices meanwhile hit an 11-month high, helped by
gold's rise and extending gains they posted on Monday after
better-than-expected U.S. car sales data.
Spot gold <XAU=> hit a high of $964.30 and was at $963.75 an
ounce at 1540 GMT, against $955.55 an ounce late in New York on
Monday. Silver <XAG=> was at $14.64 an ounce against $14.21.
HSBC analyst James Steel said Tuesday's gains were based on
U.S. pending home sales data released at 1400 GMT, which showed
sales of previously homes in the United States rose for the
fifth straight month. []
"The better-than-expected home data ... has gone into
boosting gold," he said.
"Continued weakness in the dollar is the primary reason for
gold's rally," he added. "Although the equity markets are down a
little bit today, there has been an increase investor risk
appetite ... that has indirectly tended to support gold."
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 tends to boost investor appetite for hard
assets such as gold, as well as making the precious metal
cheaper for holders of other currencies.
On the wider markets, U.S. stocks returned to break-even
after posting losses in earlier trade as data on June personal
consumption and expenditures instilled caution. []
WEAK DEMAND
However, 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. []
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, platinum <XPT=> was at $1,245
an ounce against $1,232.50, while palladium <XPD=> was at
$274.50 against $269.50, a new 11-month high.
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. []
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 Christopher Johnson)
