* Gold dented as dollar rises after US home data, Trichet
* Oil climbs nearly $2 a barrel on supply concerns
* Platinum, palladium lower after turbulent trade
(Recasts, updates with quotes, closing prices, market activity, adds
NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 7 (Reuters) - Gold ended lower on Thursday
as the dollar rebounded against the euro after a surprise rise in
June U.S. home sales and comments by European Central Bank President
Jean-Claude Trichet.
Platinum retreated after a rise in prices fueled by strike action
in South Africa on Wednesday ended a three-session slide that drove
prices down some $180 an ounce to six-month lows.
Gold <XAU=> ended at $871.05/872.45 an ounce by New York's last
quote, down from $878.70/879.90 late on Wednesday. Earlier this week
the precious metal dropped to a seven-week low as part of a broader
commodities sell-off fueled by a firmer dollar.
The U.S. dollar rose to a 5-1/2-month high against a basket of
currencies and a seven-week peak versus the euro, bolstered by a
surprise rise in June home sales and diminished expectations for
euro-zone interest rate increases.
"There is less and less likelihood that the ECB will hike rates
... and, of course, that is weighing on the euro," said Dresdner
Kleinwort consultant Peter Fertig. "(That) leads to a firmer U.S.
dollar, which is negative for gold."
"As we fully expect that the euro is going to weaken
considerably, we expect gold will remain under pressure," he added.
Gold typically moves in the opposite direction to the dollar, as
it is often used as a hedge against weakness in the U.S. currency.
U.S. gold futures for December delivery <GCZ8> settled down $5.10
at $877.90 an ounce on the COMEX division of New York Mercantile
Exchange.
Oil, the other main external driver of gold, ended $1.44 higher
at $120.02 a barrel, recovering from three-month lows.
Firmer crude prices usually benefit gold, which can be bought to
hedge against oil-led inflation. While Thursday's price rise supports
gold, analysts warn the oil market remains fragile.
In top gold producer South Africa, gold output fell 12.3 percent
in volume, while overall mineral production fell 6.3 percent in June
year-over-year. []
DEHEDGING SET TO SLOW
Analysts fear gold prices could be set to lose a key source of
support as the rate slows at which miners buy back gold they have
sold forward. The process, known as dehedging, has been a key source
of demand in recent years.
Gold miners cut their hedging positions by 16 percent in the
second quarter of 2008, but the rate of dehedging is likely to slow
in the second half of the year, a report sponsored by Fortis Bank
said on Thursday. []
Among other precious metals, platinum posted small losses in
sympathy with gold, but was largely steady after Wednesday's price
rise, which snapped a three-session, $180 run of losses.
While traders remain worried about the outlook for the car
industry, source of 50 percent of platinum demand, Wednesday's strike
among South African workers has refocused attention on supply
issues.
"Losses in this market have been overdone, especially given the
potential threats to supply (that remain), particularly in South
Africa," said Barclays Capital in a note.
Spot platinum <XPT=> ended lower at $1,572.00/1,592.00, down from
$1,594.50/1,614.50 late in New York on Wednesday.
Spot palladium <XPD=> finished at $343.00/351.00 an ounce, down
from $349.50/357.50 late in New York. Silver <XAG=> slipped to
$16.18/16.25 an ounce from its previous finish of$16.51/16.57.
