* Dollar lifts from 6-1/2 month lows vs the euro
* Good buying reported in main consumer India
* Coming up: U.S. factory orders, pending home sales data
(Updates prices)
By Jan Harvey
LONDON, Oct 4 (Reuters) - Gold firmed on Monday, supported
near record highs as investors continued to fret about the
outlook for the dollar amid speculation of further U.S. monetary
easing, but with a recovery in the unit keeeing a lid on gains.
Spot gold <XAU=> was bid at $1,317.25 an ounce at 1120 GMT,
against $1,315.60 late in New York on Friday. It touched a
record $1,320.80 an ounce in that session. U.S. gold futures for
December delivery <GCZ0> rose 80 cents to $1,318.60.
The dollar has slipped and gold has risen to a series of
record highs after a string of lacklustre U.S. data reports
raised concerns that the U.S. authorities would have to take
action to boost sluggish growth.
"Gold is stalling near Friday's highs again, (with) a small
dollar rebound this morning limiting the upside," said Andrey
Kryuchenkov, an analyst at VTB Capital. "(It) will continue here
ahead of U.S. data."
He said, however, that betting on a correction in gold from
these levels was "standing against a steaming train".
"The uptrend is still intact even though the market is
overbought technically," he said. "It will come off eventually,
the problem is every move lower is seen as an opportunity to add
to longs... as uncertainty over QE2 looms."
The dollar recovered slightly from the 6-1/2 month low it
hit against the euro earlier on Monday, with the single
currency's inability to hold gains above that level prompted
investors to trim long positions in the unit. []
Analysts said the dollar may find some short-term relief as
investors cover short positions in the currency, but many say
the trend for dollar weakness is intact amid ongoing speculation
the Federal Reserve could ease U.S. monetary policy further.
Analysts will be eyeing key U.S. data releases, including
U.S. August factory orders numbers and a pending home sales
report due later on Monday. However, this week's main focus will
be the U.S. non-farm payrolls numbers on Friday.
DETERIORATION
"Continued deterioration in U.S. economic data would
reinforce the already negative sentiment surrounding the
dollar," said CMC Markets analyst Michael Hewson in a note.
"This Friday's U.S. employment and payrolls report for
September should offer clues as to whether or not the U.S.
economy is starting to turn around."
On the physical markets, gold demand was firm despite
near-record prices. Buying by Indian gold jewellers showed no
sign of slowing as a strong rupee helped consumers defy record
bullion prices during the festive season, dealers said. []
A senior official at the World Gold Council told Reuters
that central banks in Russia, China and the Philippines are
expected to continue raising their gold holdings to balance
their reserves, a potentially significant demand driver.
[]
Silver <XAG=> was at $22.04 an ounce versus $21.97.
As a smaller and less liquid market, silver has outpaced the
rise in gold prices so far this year, with the gold-silver ratio
- the number of silver ounces needed to buy an ounce of gold -
dipping below 60 for the first time in nearly a year last week.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic showing the development of the gold-silver
ratio, click on:
http://graphics.thomsonreuters.com/AS/0810/RS_20100410113232.jpg
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Platinum <XPT=> was at $1,671 an ounce against $1,675.15,
and palladium <XPD=> at $569 against $569.50.
UBS analyst Edel Tully said in a report that platinum group
metals had seen a rush of speculative money in recent weeks.
While the metals are likely to benefit along with other
commodities from dollar weakness and emerging market flows, the
increase in speculative net length into U.S. platinum and
palladium could make them vulnerable to stalling, she said.
"To keep PGMs on their recent upward trajectory will need
continued inflows of new money. With Nymex positioning sitting
close to record levels, this will be an uphill battle."
(Reporting by Jan Harvey; Editing by William Hardy)
