* Trade thin as the U.S. markets shut for Labor Day
* Oil down as Gustav shows no sign of strengthening
* Dollar's rise puts on further pressure
* Platinum drops almost 4 pct on demand woes
(Recasts, updates prices)
By David Sheppard and Humeyra Pamuk
LONDON, Sept. 1 (Reuters) - Gold fell on Monday as hopes
Hurricane Gustav would do less damage than first feared to the
Louisiana coast bolstered the dollar and pressured oil prices.
Platinum tumbled almost 4 percent as poor car sales and a
slowing U.S. economy weighed on the metal, which has fallen
nearly 40 percent since hitting a lifetime high of $2,290 an
ounce in March.
Gold <XAU=> was down at $821.30/822.70 an ounce by 1411 GMT
from $830.35/832.35 an ounce late in New York on Friday.
"Now Gustav has been downgraded to a Category 2 hurricane,
that's boosting the dollar and weakening oil, both of which are
negative for gold," a Standard Bank trader said.
Oil fell by almost $3 a barrel as Hurricane Gustav weakened
shortly before making landfall. The hurricane has forced the
shutdown of nine refineries and nearly all U.S. Gulf of Mexico
oil production.
The U.S. dollar index rose to a year high, lessening the
appeal of gold as an alternative to the dollar and making the
metal more expensive for local currency holders.
"Gold couldn't get back to $850 an ounce so it looks like we
could try testing below $800 an ounce now," said Commerzbank
trader Michael Kempinksi, citing weakness in oil prices and the
dollar's recent strength.
But for the longer term, several analysts are bullish, with
strong jewellery and gold coin demand expected to provide
support for the yellow metal.
Gold jewellery sales in Abu Dhabi soared 300 percent in
volume and almost 250 percent in value in August from a year
earlier after the metal dropped to nine-month lows, the
emirate's industry group said on Monday.[]
"The first two weeks of August saw 60,000 gold coins sold in
the U.S. The U.S. mint describes the activity as unprecedented
as new retail investors enter the market," said Meridian Fund
Managers in a research note.
"India's festival season begins next week and should provide
strong support to the price of the commodity throughout the
fall," it said.
Barclays Capital analyst Suki Cooper said: "We've not seen
much safe haven buying throughout August, however physical
buying has started to pick-up again and futures prices are
strengthening which suggests prices will be well supported above
$800 an ounce."
The metal dropped to a nine-month low of around $773 an
ounce in mid-August before bouncing back, but it is still
trading well below its all-time high of $1,030.80 an ounce hit
in March.
SLOW DEMAND
Spot platinum <XPT=> fell as low as $1,418.50 an ounce, down
from $1,474.50/1,494.50 in New York, with technical selling. The
metal was last at $1,439/1,451.
"I think demand is slow right now. There are still worries
about the global economy, that's why they don't want to buy too
much for the being," said Dick Poon, manager of precious metals
at Heraeus Ltd. in Hong Kong.
The bulk of the world's platinum is used by automakers in
autocatalyst systems that scrub exhaust fumes of dangerous and
environmentally damaging chemicals.
A sudden slowdown in car sales in China and India is
threatening to shrink the global auto market this year, spelling
tougher times for an industry leaning on the two most populous
countries to pick up the slack in the West. []
Spot palladium <XPD=> eased to $297.00/303.00 an ounce from
$303.00/341.00 an ounce. Silver <XAG=> fell to $13.43/13.49 an
ounce from $13.58/13.68 an ounce late in New York.
(Editing by Toby Chopra)
(Reporting by David Sheppard
