* 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
(Updates prices, adds comment)
By Jan Harvey
LONDON, Nov 5 (Reuters) - Gold slipped nearly 2 percent on
Wednesday as the dollar recovered some the previous session's
losses against the euro, benefiting from risk aversion and hopes
the change in the U.S. presidency will boost the economy.
Weaker oil prices are also pressuring the metal. However,
strong physical demand for gold and a better appetite from
buyers after it held at the $700 an ounce support level are
likely to underpin prices, traders said.
Spot gold <XAU=> touched a session low of $748.75 before
recovering to $755.00/757.00 an ounce at 1443 GMT, down from
$763.20 late in New York on Tuesday.
"The dollar weakened a lot yesterday and had a nominal
recovery this morning," said Fairfax analyst John Meyer. "That
is probably what has been pushing gold more than anything else."
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 Finance head of trading Afshin
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
at 1535 GMT for clues as to the next move for crude futures.
PLATINUM FIRMS
Among the other precious metals, platinum <XPT=> rose nearly
4 percent to $872.50/892.50 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 after a furnace run-out earlier in the day.
It said the shutdown would result in a 150,000-200,000 ounce
reduction in its refined platinum output for 2008. []
Sister metal palladium <XPD=> was at $211.50/221.50 an
ounce, up from $206.50 an ounce. Both metals have fallen sharply
in recent months on fears over falling demand from carmakers.
"Fundamentally both (platinum and palladium) are facing a
very significant deceleration in demand and even a decline given
the onset of weakness in the automotive sector," JP Morgan
analyst Michael Jansen said in a research note.
"(However), palladium's supply-side is less tight due to the
abundance of above ground material, held in both Swiss vaulting
and in Russian state stocks."
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.
Silver <XAG=> edged up to $10.23/10.33 an ounce, against
$10.19 in late New York trade on Tuesday.
(Reporting by Jan Harvey; editing by Karen Foster)
