* Gold retreats as dollar strength saps buying
* IMF sells 200 tonnes of gold to India's central bank
* SPDR gold holdings unchanged at 1,103.519 T
(Updates prices, adds comments)
By Maytaal Angel
LONDON, Nov 3 (Reuters) - Gold rose back above $1,060 on
Tuesday as more investors overlooked a dollar rally and
responded positively to news the International Monetary Fund
sold 200 tonnes of gold to India's central bank.
Spot gold <XAU=> was quoted at $1,062.00 an ounce at 1302
GMT, up from $1,059.15 quoted late in New York on Monday.
Earlier on Tuesday, the metal hit a near two-week high of
$1,066.15, within sight of the Oct. 14 record high of $1,070.40.
"The IMF (news) is bullish but look at copper prices, look
at the euro dollar, look at stock markets, it's very impressive
gold can actually rally given all other risky assets are
falling," said Jesper Dannesboe, senior commodity strategist at
Societe Generale.
"I think (gold) will take out the record high. Once the
dollar stabilises, gold will take off."
The IMF said on Monday it had sold 200 tonnes of gold to
India for $6.7 billion. Although an IMF gold sale had been
flagged for some time, it lifted some uncertainty from the
market by helping soak up supply. []
"It's potentially bullish from several points of view," said
Commerzbank analyst Eugen Weinberg. "Gold was kept off the
market and sold directly to central banks so potential sales on
market are limited."
The IMF sale, part of an agreement to sell about an eighth
of the Fund's stock, fuelled speculation that other governments
-- including Beijing -- may be ready to diversify their reserves
even at near record prices.
"It's a rumour but I'd say where there is smoke there is
also some fire," said Weinberg.
U.S. gold futures for December delivery <GCZ9> rose $9.40 an
ounce to $1,063.30 on the COMEX division of the New York
Mercantile Exchange. Last month, futures hit a record $1,072 an
ounce.
DOLLAR WEIGHS
The dollar hit a one month high against a currency basket on
Tuesday as investors retreated from risk assets. A strong dollar
makes gold and other commodities priced in the U.S. unit less
attractive for non-U.S. investors. []
The U.S Federal Reserve begins a two-day policy-setting
meeting later this session. While the bank is expected to keep
benchmark interest rates unchanged near zero, there is
speculation it might alter its pledge to keep rates low for an
"extended period". [].
"The Fed meeting might outweigh the positive impact of the
IMF sales should the dollar become stronger," said Weinberg.
In the broader markets, European stocks fell to a one month
low as banks suffered poor results. Declining equity markets
used to boost gold's safe haven appeal, but they have recently
worked to increase safe haven flows to the dollar, at the
expense of gold. []
On the physical investment side, the picture still looked
subdued. The world's largest gold-backed exchange-traded fund,
SPDR Gold Trust <GLD>, said its holdings stood at 1,103.519
tonnes as of Nov. 2, unchanged from the previous business day.
[]
Among other precious metals, spot silver <XAG=> was at
$16.42 an ounce, against $16.43 an ounce late on Monday.
Silver has been boosted lately by a pick-up in industrial
demand. The metal is primarily industrial in application, and is
widely used in electronics manufacturing.
Platinum <XPT=> was at $1,330.50 an ounce against $1,334.00,
while palladium <XPD=> was at $319.00 against $321.50.
(Additional reporting by Lewa Pardomuan; Editing by Keiron
Henderson)
