* Dollar index <.DXY> rises as risk appetite wanes
* Gold remains supported by inflation fears, cenbank buying
* Rhodium, ruthenium prices surge in catch-up
(Releads, updates prices)
By Jan Harvey
LONDON, Nov 20 (Reuters) - Gold slipped towards $1,135 an
ounce in Europe on Friday as the dollar <.DXY> firmed, dampening
the momentum which has lifted prices more than 9 percent this
month.
Spot gold <XAU=> touched a low of $1,135.60 an ounce and was
bid at $1,137.15 an ounce at 1216 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 fell $4.40 to
$1,137.50 an ounce.
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."
The dollar index <.DXY> firmed 0.64 percent on Friday as
investors shed riskier investments. European shares fell for a
fourth session, and U.S. stock futures declined. [] []
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 resist 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."
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 $18.16 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 $1,423 an ounce against $1,441.50,
while palladium <XPD=> was at $352 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 Keiron Henderson)
