* Dollar pares losses versus the euro
* Traders await ECB rate decision for fresh direction
* Platinum, palladium steady ahead of U.S. car sales data
(Updates prices, adds comment)
By Jan Harvey
LONDON, Nov 3 (Reuters) - Gold retreated from highs on
Monday as the dollar recovered from lows against the euro, with
fears over physical demand weighing on sentiment.
Spot gold <XAU=> climbed to $725.35/727.35 an ounce at 1409
GMT from $723.05 late in New York on Friday.
"This is due to a combination of the usual daily gold
drivers -- crude oil and the euro-dollar exchange rate -- and
also the weakness of physical gold demand in India," said
Dresdner Kleinwort consultant Peter Fertig.
The dollar was pressured in early trade by a return in risk
appetite, after recording its biggest monthly gain in more than
17 years in October. However, it lifted from lows against the
euro in early afternoon on Monday in Europe. []
Traders will be keeping a close eye on a raft of interest
rate decisions due later in the week for clues to the next
direction of the gold market.
The European Central Bank is due to announce its decision on
euro zone interest rates -- expected to be a 50 basis point cut
-- on Thursday, while the Bank of England and the Reserve Bank
of Australia are also expected to announce cuts this week.
Traders will also be watching gold's other main external
driver, the crude oil market. Prices were softer on Monday, with
U.S. crude futures dipping nearly $2 a barrel as investors
focused on slowing energy demand. []
Weaker crude prices tend to pressure gold, which benefits
from interest in the metal as a hedge against inflation.
Physical demand for the metal also remains muted as price
volatility spooks investors. Gold imports to India, the world's
biggest bullion market, fell 27 percent in October year on year,
the Bombay Bullion Association said. []
Gold imports to Turkey, a key Middle Eastern market, also
tumbled to just 1 tonne from 29.7 tonnes in September, as the
firmer dollar curbed buying. []
ELECTION
All eyes are on the U.S. elections on Tuesday.
"Our (forex) team believes that an Obama victory is likely
to be short-term U.S. dollar positive, as it would allow
Washington to respond more proactively on crisis management,"
said Barclays Capital in a research note.
"This suggests that as far as the impact from currency
markets is concerned, an Obama victory could lead to potential
short-term downside risks for gold," they added.
The platinum group metals were little changed as the market
awaited U.S. auto sales figures later in the session.
The numbers are expected to fall to the lowest levels of the
year in October and possibly their weakest in two decades, as
consumer confidence continues to languish. []
Soft car sales data from Europe are already pressuring PGMs.
The German car market fell at least 10 percent in October,
an industry body said, while French car sales in October slid
7.3 percent, a second group said. []
Spain's car sales in the same month tumbled 40 percent, the
Spanish car manufacturers' association said. []
Spot platinum <XPT=> edged down to $806.50/836.50 an ounce
from $813 an ounce late in New York on Friday, while spot
palladium <XPD=> was unchanged at $193.50/205.50.
"Without any clear direction from producers on supply
management and demand from the automotive sector falling away,
the surplus accumulation in the market will weigh on prices,"
said JP Morgan analyst Michael Jansen in a research note.
Among other precious metals, spot silver <XAG=> was at
$9.73/9.83 against $9.81 an ounce.
(Reporting by Jan Harvey; editing by Editing by Peter
Blackburn)
