* Above-consensus fall in U.S. producer prices lifts dollar
* Oil prices climb back above $82/bbl; OPEC holds output
* Platinum rises to 2-month high on S.Africa output fears
(Releads, adds comment, updates prices)
By Jan Harvey
LONDON, March 17 (Reuters) - Gold prices eased in Europe on
Wednesday, surrendering earlier gains, as the euro hit session
lows versus the dollar, which rose after a larger-than-expected
fall in U.S. producer prices in February.
Gold had climbed as high as $1,132.80 an ounce earlier as
the U.S. Federal Reserve's announcement that it will keep
interest rates low for an "extended period" knocked the dollar.
Spot gold <XAU=> was bid at $1,121.90 an ounce at 1507 GMT,
against $1,124.70 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ0> on the COMEX division of the New York
Mercantile Exchange were flat at $1,122.50 an ounce.
"The euro has given up gains and failed to push above $1.38,
which is crucial resistance for the market, so gold is falling
back," said VTB Capital analyst Andrey Kryuchenkov.
U.S. producer prices fell more steeply than expected in
February as energy costs tumbled, supporting the Federal
Reserve's resolve to hold interest rates exceptionally low for
an extended period. []
The dollar recovered early losses made after the Fed stuck
to its pledge to keep interest rates at current record lows late
on Tuesday, edging higher versus the euro in the wake of the PPI
data. [] []
"Gold's inverse relationship with the dollar is such a
powerful (influence) that most moves in gold on a daily basis
can be explained by currencies," said Nick Moore, head of
commodity strategy at RBS Global Banking & Markets.
The Fed's decision is likely to benefit gold in the longer
term, analysts said, as low interest rates cut the opportunity
cost of holding gold, or the amount it costs investors to hold
non-interest bearing bullion instead of other assets.
"As a non-yielding asset, obviously if interest rates remain
near zero, gold can compete, but as soon as we see indications
of tightening, it will be on the back foot," said Moore.
Among other commodities, oil extended the previous session's
near $2 gains to well above $82 a barrel as OPEC opted to keep
output steady. Gold tends to track crude prices, as the metal
can be bought as a hedge against oil-led inflation. []
PLATINUM HITS 2-MTH HIGH
On the physical markets, Indian gold buying softened in
response to rising dollar prices after strong festival-related
demand took it to one-week highs earlier.
Platinum meanwhile hit two-month highs at $1,641 an ounce
and palladium rose on fears over power output in South Africa,
which is the source of four-fifths of the world's platinum and
the second biggest palladium producer.
South African state-run utility Eskom said on Tuesday power
supply is seen as a serious concern from 2011 onwards until new
power stations come onstream. []
The metals, mainly used in autocatalysts, have already risen
strongly this year on expectations for rising car sales.
The world's biggest premium carmaker, BMW <BMWG.DE>, told
Reuters on Wednesday that its group vehicle sales will rise by
more than 5 percent this year. []
The platinum-gold ratio was at 1.45 on Wednesday and earlier
this week matched the 18-month high of 1.46 it hit in January.
Commerzbank said in a note that on a historical basis "the
ratio is not particularly high, implying that platinum still has
potential to catch up."
Platinum <XPT=> was at $1,626 an ounce versus $1,633.50, and
palladium <XPD=> at $472.50 versus $470.
Among other precious metals, silver <XAG=> was at $17.41 an
ounce versus $17.40. The ratio of silver to gold hit 64.46 on
Wednesday, its lowest since Jan. 25, meaning silver is
increasingly expensive compared to gold.
(Editing by Amanda Cooper)
