* Gold pressured by dollar rise ahead of Fed meeting
* Inverse gold-dollar correlation seen strengthening
* PGM down as Chinese car sales show signs of slowing
* Coming up: U.S. Fed interest-rate decision Tuesday
(Recasts, updates prices at market close, adds comments,
changes byline, dateline, previous LONDON)
By Frank Tang
NEW YORK, Aug 9 (Reuters) - Gold futures ended lower on
Monday, snapping an eight-session winning streak, as a stronger
dollar prompted investors to lock in profits ahead of a closely
watched policy statement by the U.S. Federal Reserve.
Platinum group metals, mainly used as catalytic converters
in vehicles, dropped nearly 2 percent on signs that car sales
could slow in China, the world's fastest growing economy.
Michael Daly, gold specialist at Chicago-based futures
broker PFGBest, said the yellow metal should still benefit from
buying related to the Indian wedding season starting in
September and safe-haven demand amid economic uncertainties in
the near term.
"Gold investors took profits on a strong dollar, as there
hasn't been any significant momentum and follow-through after
Friday's disappointing unemployment number," he said.
"However, whether it be inflation or deflation, gold
happens to be the choice right now, especially in any type of
crisis," Daly said.
Spot gold <XAU=> was at $1,200.75 an ounce at 2:49 p.m. EDT
(1859 GMT), against $1,203.30 late in New York on Friday.
U.S. gold futures for December delivery <GCZ0> settled down
$2.70 at $1,202.60, the contract's first decline since July
27.
In June, gold rose to an all-time high at $1,264.90 an
ounce as investors piled in on worries that a sovereign debt
crisis in Europe might spread.
The metal broke above $1,200 last week to hit its highest
level since mid July, after weaker-than-expected U.S. payrolls
data fueled concerns over the outlook for the U.S. economy,
knocking the dollar lower.
A spate of soft U.S. economic data has led to talk that the
Federal Reserve may announce additional monetary easing, such
as bond purchases, after its meeting on Tuesday.
"It is the weakness in the United States, and the potential
for some loosening in monetary policy measures, that are really
positive for gold," said Michael Widmer, an analyst at Bank of
America-Merrill Lynch.
The central bank was expected to renew its vow to keep
interest rates near zero for an extended period.
[]
The U.S. dollar rose against major currencies as investors
squared up positions a day ahead of the Fed announcement.
[]
"After breaking down for most of the year, the inverse
dollar/gold relationship may be reasserting itself," said HSBC
analyst James Steel in a note.
The usual inverse relationship between gold and the dollar
loosened this year as extreme risk aversion benefited both
assets, but it has since shown signs of a resurgence.
(Graphic: http://link.reuters.com/cez93n)
CHINA NEWS PRESSURES PLATINUM
Silver <XAG=> was at $18.29 an ounce against $18.31.
Platinum <XPT=> was at $1,540 an ounce against $1,563.25, while
palladium <XPD=> was at $475.50 an ounce versus $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 with platinum, analysts said.
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
rate in 15 months in July as the world's largest auto market
cooled. []
Palladium was still 17 percent higher for the year on
strong investment demand and economic optimism, compared with
platinum's 5 percent and gold's 10 percent.
Prices at 3:01 p.m. EDT (1901 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1202.60 -2.70 -0.2% 9.7%
US silver <SIU0> 18.242 -0.230 0.0% 8.3%
US platinum <PLV0> 1542.90 -27.90 -1.8% 4.9%
US palladium <PAU0> 479.65 -7.95 -1.6% 17.3%
Gold <XAU=> 1200.55 -2.75 -0.2% 9.5%
Silver <XAG=> 18.30 -0.11 -0.6% 8.7%
Platinum <XPT=> 1540.00 -23.25 -1.5% 5.1%
Palladium <XPD=> 475.50 -8.55 -1.8% 17.3%
Gold Fix <XAUFIX=> 1203.00 -3.00 -0.2% 9.0%
Silver Fix <XAGFIX=> 18.48 18.00 1.0% 8.8%
Platinum Fix <XPTFIX=> 1558.00 0.00 0.0% 6.3%
Palladium Fix <XPDFIX=> 485.00 2.00 0.4% 20.6%
(Additional reporting by Jan Harvey in London)
