* Gold ends off session highs on broad liquidation
* Dow drops more than 300 points
* Industry report shows strong physical gold hoarding
(Recasts, updates prices, market activity to close; new
byline, changes dateline, previously LONDON)
By Frank Tang
NEW YORK, Nov 19 (Reuters) - Gold ended slightly higher on
Wednesday, reversing sharp early gains amid liquidation across
all asset classes and signs of sliding consumer prices.
"The stock market is playing a role, and it's certainly
related to the inflationary expectations being pared back as
reflected by the U.S. CPI and PPI data recently," said Stephen
Platt, analyst of Archer Financial Services.
U.S. consumer prices fell at a record pace in October and
new-home building slumped, according to government reports
suggesting a recession that may be long and deep.
A 300 point drop of the Dow Jones industrial average <>
prompted risk-averse investors to sell liquid assets including
gold and opt for cash.
Spot gold <XAU=> at $737.15 at 2:55 p.m. EST (1955 GMT), up
0.1 percent from $736.35 an ounce in New York late on Tuesday.
U.S. gold futures for December delivery <GCZ8> settled up
$3.30 at $736.00 an ounce on the COMEX division of the New York
Mercantile Exchange.
Gold came off session highs as the dollar retraced losses
against the euro following the CPI report and crude oil slid to
end nearly $1 down below $54 per barrel. [] []
Gold tends to decline as the dollar strengthens, making
bullion more expensive for holders of other currencies. Falling
oil prices dim gold's appeal as a hedge against the inflation.
Gold has declined more than 26 percent since hitting a
record high of $1,030.80 an ounce in March, and is down about
10 percent from the end of 2007.
An industry report showing strong physical demand for
bullion led to buying early in the sessions, traders said.
Global demand for gold jumped 18 percent year-over-year to
1,133.4 tonnes in the third quarter as investors hoarded gold
bullion coins and bars and jewelry buying rose, the World Gold
Council (WGC) said on Wednesday. []
"Third-quarter demand was certainly impressive, and that
has helped contribute to support better buying we saw earlier
today," Platt said.
"The market wasn't able to get through significant chart
points, and subsequently attracted profit taking," Platt said.
Market talk about China possibly diversifying part of its
huge reserve into gold failed to bolster the market.
An Iranian newspaper reported that a cabinet minister said
the country is not converting reserves into gold, contrary to
comments by an aide to the president. []
PLATINUM SUPPORTED
Platinum prices ended lower despite rallying as much as 3
percent early amid announcements of mine closures. Platinum
<XPT=> fetched $807.50, down 2.3 percent from late Tuesday.
Lonmin, the world's third-biggest platinum producer, said
it would close some high-cost mines and was cutting costs to
survive a market downturn. []
But analysts do not expect a major recovery in platinum
because of slow demand from the troubled auto sector. More than
60 percent of global platinum use goes to autocatalysts to
clean exhaust fumes.
Silver <XAG=> at $9.29, down 3.3 percent from Tuesday's
finish of $9.60 and palladium <XPD=> fetched $184.00, down 13.8
percent from its previous close of $213.
(With additional reporting by Humeyra Pamuk in London)
