* Dollar recovers lost ground vs euro after Tuesday's slide
* Oil falls $3 a barrel, traders eye U.S. inventory data
* Rhodium touches near four-year low on demand fears
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Nov 5 (Reuters) - Gold eased in Europe on Wednesday
as the dollar recovered some lost ground against the euro after
Democrat Barack Obama won the U.S. election and with hopes the
change in the presidency would be positive for the economy.
However, strong physical demand for gold and a better
appetite for the precious metal after holding at the $700 an
ounce support level is likely to underpin prices, traders said.
Spot gold <XAU=> was quoted at $753.00/755.00 an ounce at
1138 GMT, down from $763.20 late in New York on Tuesday.
Afshin Nabavi, head of trading at MKS Finance, said that
with physical demand for gold as strong as it is, bullion prices
were unlikely to test new lows.
"$750 an ounce was a good resistance level yesterday, and is
likely to become a good support today," Nabavi said.
The dollar slipped sharply against the euro on Tuesday,
lifting gold nearly 5 percent. Gold typically moves in the
opposite direction to the dollar, as it is often bought as an
alternative asset to the U.S. currency.
Fresh strength in the dollar on Wednesday has pressured
gold. The dollar rose against a basket of currencies after
Obama's victory, and as traders weighed up the prospect of a
euro zone rate cut later this week. []
The European Central Bank is expected to cut interest rates
by 50 basis points at a meeting on Thursday.
"That should be negative for the euro and for gold, but
because (that expectation) has been in the market for a while
now, we may not see a reaction unless the cut is bigger or
smaller than expected," said MKS' Nabavi.
Gold's other main external driver, crude oil, was also
weaker, slipping more than $3 a barrel to below $68 as the
firmer dollar sparked profit-taking after the previous session's
more than 10 percent surge.
Oil traders will be watching for U.S. inventory data due out
later in the session for clues as to the next move for crude
futures.
PLATINUM FIRMS
Among the other precious metals, platinum <XPT=> edged up to
$847/867 an ounce from $841.50.
Anglo Platinum <AMSJ.J>, the world's biggest producer of the
white metal, said it had shut down its Polokwane smelter in
South Africa, and was investigating reports of a fire at the
facility. []
Sister metal palladium <XPD=> was at $209/219 an ounce, up
from $206.50 an ounce. Rhodium slid to a near four-year low on
fears over falling demand from carmakers.
The metal, which like platinum and palladium is chiefly used
as a component in autocatalysts, has been pressured sharply
lower by fears slowing economic activity will cut consumption.
Rhodium <RHOD-LON> slipped to a $1,400 an ounce, from a
previous quote of $1,595. It has shed more than 85 percent of
its value since touching a high above $10,000 an ounce in June.
"Palladium, being the biggest underperformer over the last
two years, has been relatively stable over the last couple of
months," Commerzbank trader Rory McVeigh said.
"Rhodium on the other hand has come under pressure from some
speculative shorts in the market, and late in the year with
light physical demand, this seems to be working in their
favour," he said.
"But with this low price, physical consumers are looking at
the market and buying some now for 2009. The flagging oil price
is taking some pressure off the deflated auto market."
Silver <XAG=> was little changed at $10.18/10.28 an ounce,
against $10.19 in late New York trade on Tuesday.
(Reporting by Jan Harvey; editing by Editing by Karen Foster)
