* Gold, silver hit lowest since Oct. 6 as dollar recovers
* Dollar bounces back after U.S. consumer confidence data
* Indian buyers hunt bargains; U.S. gold ETF sees outflows
(Updates prices)
By Jan Harvey
LONDON, Oct 27 (Reuters) - Gold and silver prices slid to
three-week lows in Europe on Tuesday as the dollar rose after
weaker-than-expected U.S. consumer confidence data, denting
interest in the metals as an alternative asset.
But gold bounced back into the black after finding good
resistance at its previous long-standing record high just above
$1,030 an ounce, which it passed on Oct. 6. Traders say they
expect the metal to consolidate here before moving higher.
Spot gold was bid at $1,038.35 an ounce at 1604 GMT, against
$1,037.10 late in New York on Monday. U.S. gold futures for
December delivery <GCZ9> on the COMEX division of the New York
Mercantile Exchange eased $4.00 to $1,038.80 an ounce.
Afshin Nabavi, head of trading at MKS Finance in Geneva,
said he expects prices to stay in a $1,030-$1,070 range. He said
gold's move lower was due to the euro's weakness versus the
dollar.
"I would say we are getting close to the bottom for gold,"
he said. "This is the correction we were looking for."
The dollar hit session highs against the euro on Tuesday
after data showed U.S. consumer confidence worsened in October.
The Conference Board's U.S. consumer confidence index fell to
47.7, against expectations for a reading of 53.1. []
The dollar has tended to benefit from negative economic data
in recent months, with traders selling higher-yielding
currencies such as the euro when risk appetite wanes.
On the wider markets, European shares pared gains after the
data, while U.S. stocks rose in choppy trade after a
well-received earnings report from BP <BP.L>. Earlier the weak
consumer confidence numbers had knocked buying. [] []
BARGAINS SOUGHT
Oil rose back above $79 a barrel after three straight days
of declines, as investors awaited direction from equities and
U.S. oil inventory data. []
In the physical gold market, a dip in prices has sparked
some bargain hunting activity in major gold consumer India,
though the weak rupee weighed on prices. Jewellery buying has
been weak this year as high prices deterred investors.
"(Traders) would buy in huge quantities if prices move
towards $1,033," said one Mumbai gold dealer. []
In New York, the world's biggest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, said it saw an outflow of 1.22
tonnes on Monday. Investment demand for products like ETFs has
been a major support to prices this year. []
Among other precious metals, spot silver <XAG=> was bid at
$16.76 an ounce against $17.05, having tracked gold down to a
three-week low of $16.63.
Platinum <XPT=> also touched a three-week low of $1,313.50
an ounce, and was later bid at $1,317 an ounce against
$1,330.50. Palladium <XPD=> was bid at $325 against $329.50.
Aquarius Platinum <AQP.L>, the world's fourth-biggest
platinum producer, warned a strong South African rand was
erasing gains from rising metals prices, even as it reported a
swing into profit in the first quarter. []
Meanwhile fund manager George Cheveley of the Investec
Enhanced Natural Resources Fund told Reuters that platinum
prices have the potential to hit new highs in the medium term as
soaring costs in South Africa pressure supply. []
(Editing by David Brough)
