* Tumbling oil, strong dollar weigh on gold, commodities
* Venezuela to take over Crystallex's Las Cristinas mine
* Rhodium touches near four-year low on demand fears
(Recasts, updates prices, market activity, comments, to close;
adds second byline, dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Nov 5 (Reuters) - Gold dropped more than 2
percent Wednesday as oil tumbled and Barack Obama's historic
White House victory bolstered the dollar, which pressured
commodities across the board.
"The dollar is pretty strong and the (gold) decline was on
the back of oil. This is just more of the same people who don't
believe right now gold can rally," said Bruce Dunn, vice
president of trading at New Jersey-based Auramet Trading.
Dunn also cited a thin market and "sell the rally"
mentality among bullion investors.
Spot gold <XAU=> was at $741.30, down 2.6 percent from
Tuesday's close of $761.95.
U.S. December futures <GCZ8> settled down $14.90, or 2
percent, at $742.40 an ounce on the COMEX division of the New
York Mercantile Exchange.
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.
Gold's other main external driver, crude oil, was also
sharply weaker, ending more than $5 a barrel lower to below $66
after a U.S. government report showed rising fuel stockpiles.
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.
Also, Venezuela said it will take over Canadian miner
Crystallex's <KRY.TO> Las Cristinas gold project, one of Latin
America's largest, the latest move by President Hugo Chavez to
bring key industries into the hands of the state.
[]
George Gero, vice president of RBC Capital Markets Global
Futures, said that the gold market tended to ignore
geopolitical problems and political fears such as the Venezuela
news.
Gero cited hedge fund liquidations triggered by the sharp
drop in the U.S. stock markets. The broad-based Standard &
Poor's 500 index <.SPX> was down more than 4 percent in late
trading.
PLATINUM FIRMS
Among the other precious metals, platinum <XPT=> ended at
$863.50, up 2.6 percent from its Tuesday close.
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 $215.00, up 4.1
percent from Tuesday's close. Both metals have fallen sharply
in recent months on falling demand from carmakers.
Rhodium slid to a near four-year low, also on weak auto
market demand. Like platinum and palladium, rhodium is chiefly
used as a component in autocatalysts.
Rhodium <RHOD-LON> slipped to $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=> closed at $10.43, up 2.6 percent from
Tuesday's close.
(Editing by Jim Marshall)
