* Gold eases from record as investors take profits
* Dollar's weakness keeps bullion appetite firm
* Volatility seen high before Thanksgiving holidays
By Chikako Mogi
TOKYO, Nov 17 (Reuters) - Gold eased off record highs hit the
day before, but investors still regard bullion as an attractive
alternative investment amid expectations of continuing dollar
weakness.
After bullion hit fresh highs over the past week, investors
have grown cautious of heightening volatility with trading volume
expected to drop next week ahead of the Thanksgiving holidays.
Investors were also wary of substantial amounts of open
positions remaining in U.S. December gold futures call options
with a strike price of $1,200, which are due to expire next week.
Buying call options has been one strategy for gaining
exposure to gold.
"Buying petered out just before reaching $1,150, suggesting
investors are not in a hurry to push prices past that level,"
said Kazuhiko Saito, chief analyst at Fujitomi Co in Tokyo.
"For now, they would rather book profits than chase prices
higher. There is also caution about heightening volatility next
week when Tokyo and U.S. markets will be closed and trading
volume will drop," he said.
Spot gold <XAU=> eased 0.3 percent to $1,135.25 per ounce as
of 0608 GMT, compared to New York's notional close of $1,139.05.
It rose as high as $1,140.85 earlier on Tuesday. On Monday, spot
gold <XAU=> reached a record $1,143.25 an ounce.
U.S. gold futures for December delivery <GCZ9> also inched
down 0.3 percent to $1,135.70 an ounce, compared to $1,139.20 an
ounce on the COMEX division of NYMEX. Futures rose as high as
$1,141.30 earlier on Tuesday, not far from a record high of
$1,144.20 hit the previous day.
Masayo Kondo, president of Fisco Commodity in Tokyo, said
gold may slide towards $1,100 in the next month as hedge funds
close their books for the year and investors begin to repatriate
funds, both of which are dollar positive and gold negative.
"Even for a brief period, the dollar's fall is bound to be
halted, and gold investors will realise the market was
overbought," he said.
While gold prices could succumb to profit-taking closer to
$1,130, momentum remains favourable for gold with no change in
the outlook for the dollar's weakness, analysts and traders said.
Gold's ascent has been driven by a combination of dollar
weakness, inflation worries and doubts about a nascent economic
recovery.
U.S. Federal Reserve Chairman Ben Bernanke said on Monday the
Fed was attentive to changes in the currency, giving a slight
boost to the U.S. dollar. But Bernanke also signalled U.S. rates
will stay at zero for some time. []
The dollar was off 15-month lows but still on the defensive
in Asia on Tuesday, after falling the previous day when a rise in
U.S. retail sales failed to change the outlook for low U.S.
interest rates and disagreement among Asian and U.S. leaders on
exchange rates weakened the greenback. []
Gold also needs more impetus from factors directly related to
the balance between supply and demand, said Koichiro Kamei,
managing director at the financial research firm Market Strategy
Institute in Tokyo.
Investors are keen to see how strong scrap gold selling was
in the last quarter as gold now has fewer sellers, and they also
want to look at purchases and sales by central banks during the
same quarter, he said. An industry report by the World Gold
Council is due later this week.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,113.833 tonnes as
of Nov. 16, unchanged from the previous business day. []
The world's largest silver-backed exchange-traded fund said
its holdings were unchanged as of Monday after hitting record
levels for the second straight day on Friday.
Gains in gold spurred interest in other precious metals, with
platinum, palladium, silver and rhodium all hitting their
strongest levels in more than a year on Monday.
In early Tuesday trade in Asia, platinum rose as high as
$1,451.50 <XPT=>, matching its highest since September 2008 hit
the day before, before easing to $1,434.
Precious metals prices at 0611 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1135.00 -4.05 -0.36 28.96
Spot Silver 18.18 -0.18 -0.98 60.60
Spot Platinum 1433.50 -7.50 -0.52 53.81
Spot Palladium 368.00 -5.00 -1.34 99.46
TOCOM Gold 3262.00 1.00 +0.03 26.78 54211
TOCOM Platinum 4128.00 70.00 +1.72 55.66 27658
TOCOM Silver 523.90 15.20 +2.99 64.08 666
TOCOM Palladium 1065.00 12.00 +1.14 93.64 691
Euro/Dollar 1.4944
Dollar/Yen 89.08
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
