* Coming up: U.S. Federal Reserve meeting on Tuesday
* Chinese car sales grow at slowest rate in 15 months
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Aug 9 (Reuters) - Gold firmed in Europe on Monday,
rising back towards the last session's three-week high, as the
dollar eased after lacklustre U.S. jobs data, and on uncertainty
ahead of a U.S. Federal Reserve policy meeting this week.
Spot gold <XAU=> was bid at $1,205.90 an ounce at 0938 GMT,
against $1,203.30 late in New York on Friday. U.S. gold futures
for December delivery <GCZ0> rose $3.20 an ounce to $1,208.50.
The metal broke above the $1,200 an ounce level to hit its
highest since mid July last week after weaker-than-expected U.S.
payrolls data fuelled concerns over the outlook for the U.S.
economy, knocking the dollar.
Lingering concerns that economic weakness will feed through
into volatility in other asset classes is supporting interest in
gold from longer-term investors, analysts said.
"The move up that occurred last week was funds coming into
the market," said Peter Hillyard, head of metals sales at ANZ.
"Funds were taking the view that all manner of things, including
the U.S. economy (would support gold)."
"They were taking a long view, and the long view is that
gold is going higher," he added.
Weakness in the dollar, which historically has a close
inverse correlation with gold, and expectations for a further
decline are also supporting the metal. The dollar edged lower
versus a currency basket ahead of the Fed policy meeting. []
The soft data sparked speculation that the Fed may announce
some kind of additional monetary easing, such as bond purchases,
after the meeting. The central bank is expected to renew its vow
to keep rates near zero for an extended period. []
"In one of the most awaited FOMC meetings for some time,
markets generally anticipate either a change in the Fed's
language or a move towards additional asset purchases," said UBS
analyst Edel Tully in a note, though she added that such a view
was not supported by her bank.
She said, however: "Given that gold continues to divorce
itself from the dollar, any nod towards QE2 should be positive
for the yellow metal."
STOCKS EDGE UP
On the wider markets, European shares climbed on Monday,
while world stocks edged up towards last week's three-month
peak. Oil prices rose above $81 a barrel, supported by the
weaker dollar. [] [] []
Rising gold prices translated into a fall-off in physical
demand from Indian buyers, however. Buying retreated on Monday
after a firm two weeks, traders reported. []
"Prices will have to come down below $1,200 and rupee will
have to appreciate below 46 for demand to pick up again," said a
dealer with an Indian private bank.
Among other precious metals, silver <XAG=> was bid at $18.47
an ounce against $18.31, while platinum <XPT=> was at $1,553 an
ounce against $1,563.25 and palladium <XPD=> was at $484.53
against $484.05.
The ratio of gold to platinum -- or how many gold ounces are
needed to buy an ounce of platinum -- fell to a two-week low of
1.29 on Monday, meaning the yellow metal is becoming
increasingly expensive compared to platinum.
Appetite for platinum group metals, which are widely used in
car manufacturing, has been tempered by relatively soft auto
sales data. Data showed Chinese car sales rose at their slowest
in 15 months in July as the world's largest auto market cooled.
[]
"While platinum group metals remain under pressure on a lack
of follow-through buying from last month's strength, gold could
continue to be supported by a weaker dollar," said Morgan
Stanley in a note.
(Reporting by Jan Harvey; Editing by Sue Thomas)
