* Dollar index edges higher as risk appetite wanes
* Gold remains supported by inflation fears, cenbank buying
* Rhodium, ruthenium prices surge in catch-up
(Updates prices, adds detail of ruthenium high)
By Jan Harvey
LONDON, Nov 20 (Reuters) - Gold held near $1,140 an ounce in
Europe on Friday as the upward momentum which has lifted prices
more than 9 percent this month was kept in check by a recovery
in the dollar index <.DXY>.
Spot gold <XAU=> was bid at $1,140.90 an ounce at 1120 GMT,
against $1,143.50 late in New York on Thursday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange dipped 30 cents to $1,141.60.
But the metal could be poised to break out to new highs if
the dollar's recovery falters, analysts said.
"At the moment it looks like gold is awaiting the next big
clue for a further push beyond $1,154, as current fundamentals
seem to have been totally factored into the price," said Pradeep
Unni, senior analyst at Richcomm Global Services.
"The dollar index is hovering above the 75 zone and that
strength is keeping the lid on gains," he added. "(But) the
current uptrend is pretty much intact and the dips are likely to
be once again used as fresh buying opputunities."
The dollar index <.DXY> firmed 0.33 percent on Friday as
investors pared back riskier assets, weighing on higher-yielding
currencies such as the Australian dollar. []
Usually strength in the U.S. unit weighs on gold, as it cuts
its appeal as an alternative asset and makes dollar-priced
commodities more expensive for holders of other currencies.
However, gold has enough support from investment interest
and technical momentum to overcome this pressure, analysts said.
"Normally gold has an inverse relationship with the dollar,"
said JP Morgan in a note. "However, when fundamentals make gold
more attractive, it overcomes its normal relationship. Don't be
surprised if gold is strong even on a modest dollar bounce."
Investor interest in gold was boosted early this month by a
spate of central bank gold purchases, including India's
acquisition of 200 tonnes of bullion from the IMF.
The upward move resulting from this pushed gold through key
technical resistance levels, fuelling strong momentum buying
which took gold to a record $1,152.75 an ounce on Wednesday.
INFLATION HEDGE
Analysts said gold was likely to take support from interest
in the metal as a hedge against inflation, which some fear will
hit the markets longer term as a result of quantitative easing.
Andrew Cole, manager of the Baring Multi Asset Fund, told
Reuters on Thursday that gold could hit new highs this year and
next as investors look for an inflation hedge. []
Though some analysts have said such buying of gold is
premature, JPMorgan commmented that "with respect to golden
portfolio protection; remember the time to purchase insurance is
before your house catches fire."
Silver <XAG=> was at $18.31 an ounce against $18.51. Metals
consultancy GFMS said on Thursday the metal may rise above $20
an ounce as surging investment more than offsets a drop in
fabrication demand. []
Platinum <XPT=> was at $1,428.50 an ounce against $1,441.50,
while palladium <XPD=> was at $356.70 against $366.
Fellow platinum group metal rhodium <RHOD-LON> rose to a
fresh 13-month high of $2,675 an ounce on Friday, lifted by
speculative demand in anticipation of a bounce in car sales.
Ruthenium <RUTH-LON> meanwhile jumped 23.5 percent to $105
an ounce, tracking gains in other platinum group metals this
year, as investors sought out hard assets.
"The other platinum group metals have been moving very
sharply, and ruthenium didn't move with them," said a minor
metals trader. "There is a general flight of money into metal...
people feel paper is going to be worth less."
(Editing by James Jukwey)
