PRECIOUS-Gold steady, dlr weakness offsets Dubai worries

                                
  * Markets still cautious, uncertain on Dubai debt crisis
  * Traders see gold heading back towards record after sell-off
  * Dollar falls against a basket of currencies
                                
 
                                
 (Updates prices and comments)
                                
 By Humeyra Pamuk and Maytaal Angel
                                
 LONDON, Nov 30 (Reuters) - Gold prices were steady on Monday
with a weak dollar helping to support the precious metal, which
fell earlier on wariness about Dubai's debt shock.
                                
 Spot gold <XAU=> stood at $1,176.60 an ounce by 1531 GMT,
versus $1,176.70 an ounce late in New York on Friday, when it
tumbled to $1,136.80 an ounce, its lowest since Nov. 20.
                                
 The dollar fell 0.39 percent versus a basket of major
currencies <.DXY>, boosting gold. A weaker dollar makes
dollar-priced gold more attractive for non-U.S. investors.
                                
 News that two Dubai flagship firms planned to delay repaying
billions of dollars in debt renewed credit fears and initially
pushed gold down 5 percent on Friday. [ID:nGEE5A02FN]
                                
 "The story about Dubai pressured gold but each time we had
problems getting below $1,160," said Afshin Nabavi, head of
trading at MKS Finance. "The market held extremely well despite
the uncertainty so we have a good possibility to see it aiming
back towards the $1,200 area."
                                
 Traders said investors had sold gold in a knee-jerk response
last week, after it hit record highs approaching $1,200 per
ounce. But support was seen coming from physical buying on dips,
the prospect of further gold buying by emerging market central
banks and bullion's appeal as a hedge against inflation.
                                
 "Dubai was a trigger for a correction in gold, but ... it
was a correction that might have come anyway given how much gold
has risen," said Jesper Dannesboe, senior commodity strategist
at Societe Generale.
                                
 "If there's any uncertainty gold will initially fall ...
(but) I wouldn't be surprised if you get strong buying on dips,"
he added. 
                                
 European shares were down as investors waited for clarity on
Dubai's plan to delay repaying billions of dollars in debt and
government word on how it would tackle a crisis that has rattled
global markets. [ID:nSP362937]
                                
 Gold losses were also limited by comments from a senior
Chinese official who said Dubai's debt crisis could be China's
opportunity to snap up gold and oil assets. [ID:nPEK200596]
                                
 Bullion is on track for a 12 percent rise in November alone
and the precious metal is only 2 percent below its record high
of $1,194.90 an ounce. So far this year it has gained around 33
percent. 
                                
 U.S. gold futures for February delivery <GCG0> rose $2.7 to
$1,178.1 on the COMEX division of NYMEX.
                                
 
                                
 FRESH HIGHS?
                                
 Bullion's long-term appeal remains undimmed, analysts said,
due to increasing appetite from central banks to diversify their
reserves and buy more gold, further dollar weakness and the
metal's allure as a hedge against inflation.
                                
 "The central bank story is definitely bullish for gold.
Also, the physical market still remains strong. We see buying
from current price levels, particularly from Asia," Standard
Bank analyst Walter de Wet said.
                                
 "It's difficult to say whether it would head for fresh highs
this week, but it's likely," he said.
                                
 Indian gold traders continued to make purchases as prices
eased further and a stronger rupee, which makes the
dollar-quoted asset cheaper, helped sentiment, dealers said.
[ID:nBOM397593]
                                
 "There is no change in the fundamentals because U.S.
interest (rates) will still be low at least until next year's
first half," said Wong Eng Soon, an investment analyst at
Phillip Futures in Singapore.
                                
 Market volatility deterred investment, with holdings at the
world's largest gold-backed exchange-traded fund, SPDR Gold
Trust <GLD>, steady at 1,127.860 tonnes as of Nov. 27.
[GOL/SPDR]
                                
 Silver <XAG=> was at $18.36 an ounce versus $18.25 an ounce
on Friday, when it hit a near two-week low of $17.66.
                                
 Platinum <XPT=> was at $1,448.50 an ounce, up from a close
of $1,436.50 an ounce on Friday, when it touched a one week low
of $1,418.50. 
                                
 Palladium <XPD=> was at $363.50 versus $362 an ounce on
Friday, when it touched a one-week low of $351.
 (Editing by Sue Thomas)
((humeyra.pamuk@reuters.com; Reuters Messaging:
humeyra.pamuk.reuters.com@reuters.net; +44 20 7542 9736))