(Updates with quotes, prices)
By Atul Prakash
LONDON, March 10 (Reuters) - Gold fell more than 1 percent
in Europe on Monday as the dollar changed course to rise against
the euro and oil prices eased, analysts said.
Platinum slipped nearly four percent to a one-month low
below $1,950 an ounce, silver fell more than 3 percent while
palladium declined over 4 percent to a 3-week low.
Analysts said gold was likely to trade in a range ahead of a
U.S. Federal Reserve meeting next week, but expectations of
further interest rate cuts in the United States were likely to
support the market over the medium to long-term.
Spot gold <XAU=> fell as low as $961.80 an ounce and was
quoted at $963.20/964.10 at 1319 GMT, against $972.60/973.40
late in New York on Friday.
"I wouldn't be surprised if prices didn't do a lot ahead of
the next week's Fed meeting and, the closer we get, the less
likely that people are to take big positions," said Michael
Widmer, metals analyst at Lehman Brothers.
People were cautious as the Fed meeting would give a lot of
information on issues such as the U.S. interest rate outlook and
the health of the U.S. economy, Widmer said.
Gold hit an historic high of $991.90 an ounce on March 6
before funds cashed in. The metal had gained nearly 20 percent
in 2008, on the top of a 32 percent rise last year.
"The metal's failure to break higher on Friday suggests the
market may, just for the short-term, be in need of a phase of
consolidation before challenging $1,000," said James Moore,
precious metals analyst at TheBullionDesk.com.
"Momentum indicators have turned negative over the past two
trading days and a break below $968.50 would suggest a test back
to $952 initially, although further liquidation could pressure
gold back to $936/$924," he said in a market note.
DOLLAR GAINS
The market kept a close eye on external price drivers such
as the dollar and oil for short-term direction.
The dollar rose against the euro after European Central Bank
President Jean-Claude Trichet said officials were worried about
recent volatility in foreign exchange markets.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil fell below $105 a barrel as investors cashed in on last
week's rally to record highs that was stoked by a depressed U.S.
dollar and fund flows into commodities.
Platinum suffered heavily and fell below $1,950 an ounce on
news that mines in South Africa, the world's top platinum
producer, would get 95 percent electricity supply against 90
percent. The metal has fallen 15 percent in less than a week
after hitting a record high of $2,290 on March 4.
Platinum <XPT=> fell to $1,945/1955 an ounce after rising 3
percent to $2,085, against $2,020/2,030 in New York.
Robin Bhar, metals strategist at UBS Investment Bank said
platinum was under pressure from a combination of fundamental
concerns -- the news that the South African mines would get more
power and de-leveraging as investors trimmed positions.
"With financial markets under extreme pressure at the
moment, we expect de-leveraging pressure will continue for the
near term. Platinum and especially palladium have more
short-term downside risk," he said.
Silver <XAG=> fell to $19.43/19.48 from $20.11/20.16 an
ounce, while palladium <XPD=> was down at $465/470 an ounce,
against $485/490 in New York.
(Reporting by Atul Prakash; editing by Peter Blackburn)
