* Markets still cautious on Dubai debt crisis
* Traders see gold heading back towards record
* Dollar falls against a basket of currencies
(Recasts, updates prices)
By Humeyra Pamuk and Maytaal Angel
LONDON, Nov 30 (Reuters) - Gold prices edged lower on Monday
as some investors opted for cash in residual wariness about
Dubai's debt shock, but losses were limited by a weaker dollar
and dip buying.
Spot gold <XAU=> stood at $1,172.20 an ounce by 1638 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 0.13 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 as risk aversion rose.
[]
"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, people
will close out long positions ... (but) I wouldn't be surprised
if you get strong buying on dips," he added.
Traders said investors had sold gold in a knee-jerk response
to the Dubai debt worries last week, and after the precious
metal hit record highs approaching $1,200 per ounce.
U.S. and European shares were also down on Monday 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. []
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.
Gold's 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. []
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> fell $2.2 to
$1,173.50 on the COMEX division of NYMEX.
"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."
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.
[]
"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.
[]
Silver <XAG=> was at $18.27 an ounce versus $18.25 an ounce
on Friday, when it hit a near two-week low of $17.66.
Platinum <XPT=> was at $1,444 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 $361.50 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))
