* Dollar slips from highs after U.S. trade deficit widens
* Platinum, palladium recover from lows
(Recasts, adds comment)
By Jan Harvey
LONDON, Sept 11 (Reuters) - Gold recovered from 11-month
lows on Thursday as the dollar slipped from highs in response to
U.S. trade data, and as firm physical demand for the precious
metal underpinned prices.
The stronger dollar was the key factor driving gold to fresh
11-month lows, platinum to its weakest level since January 2007
and silver and palladium to multi-year lows earlier, as its
recovery dented precious metals' appeal as an alternative
investment.
Spot gold <XAU=> traded at $745.70/746.90 an ounce at 1319
GMT from $752.55/754.15 in New York on Wednesday, having earlier
fallen to a session low of $738.50.
The precious metal slipped nearly 2 percent as the dollar
reached a one-year high against the euro. However, the dollar's
retreat after data showed the U.S. trade deficit widened in July
allowed gold to pull back some ground. []
With the effect of the strengthening dollar balancing
resurgent demand for coins, bars and jewellery, the outlook for
gold remains volatile, analysts said.
"From a fundamental point of view I would expect (gold)
prices to be stronger over the coming months due to high demand,
but from a technical point of view there are reasons to believe
they may go even lower," Commerzbank analyst Eugen Weinberg
said.
Among other precious metals, platinum and palladium also
recovered after dipping dramatically in earlier trade. Platinum
slipped more than 4 percent and palladium 5 percent as fears
over the outlook for automotive sector demand sparked selling.
Spot platinum <XPT=> fell to a session low of $1,126 an
ounce, its weakest level since Jan 2007, before recovering to
trade at $1,154.00/1,174.00 an ounce at against
$1,176.00/1,196.00 late in New York on Wednesday.
Spot palladium <XPD=> also slipped to a fresh three-year low
of $212.50 an ounce, before recovering to trade at
$227.00/233.00 against $224.00/232.00.
The automotive sector has been suffering the effects of the
recent global economic slowdown. Ford Canada <F.N> said on
Wednesday it is cutting another 500 jobs in Ontario as U.S.
sales continue to deteriorate. []
Over half of global platinum demand comes from the car
industry.
"Demand has come to the forefront rather than supply, which
the market was all about in the first half of this year," said
Mitsubishi precious metals strategist Tom Kendall. "People's
attention just keeps getting drawn back to...the auto industry."
UBS analyst John Reade said in a note that "unprecedented"
over-the-counter liquidation in platinum, plus selling on TOCOM,
NYMEX and by exchange-traded funds, has seen 2-3 million ounces
of the metal sold since early July.
"Contrast that with annual supply of about 8 million ounces
and a forecast deficit of about 500,000 ounces, and the price
move becomes more understandable," he said.
Fears over demand have pushed platinum down more than 50
percent from the highs of $2,290 an ounce it hit in March this
year, after news of an electricity shortage in South Africa,
which produces 80 percent of global supply of the metal.
Among other precious metals, spot silver <XAG=> slipped to
$10.71/10.78 from $10.75/10.83. Earlier it touched a session low
of $10.58, its weakest in nearly two years.
(Reporting by Jan Harvey; Editing by Michael Roddy)
