* Gold rises but off early highs as dollar retraces losses
* Bullion investor anxious ahead of COMEX options expiry
* Palladium hits 11-1/2-month high on better fundamentals
(Recasts, updates prices, market activity to close; adds
second byline, dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 25 (Reuters) - Gold futures ended
higher on Tuesday as the dollar dipped, but slipping crude oil
prices prompted gold to give back early gains ahead of upcoming
COMEX option expirations.
For the second straight day, gold erased sharp gains as the
dollar retraced losses and equities markets slipped off session
highs.
George Gero, vice president of RBC Capital Markets Global
Futures, said bullion traders were anxious ahead of a possible
volatile day on Wednesday due to the expirations of COMEX gold,
silver and copper September options and the weekly U.S. crude
inventory report.
"That is why gold gave up gains from this morning. The
market sold off because people pared back their positions for
tomorrow, and the euro/dollar is also off its early
exuberance," Gero said.
U.S. December gold futures <GCZ9> surged to a session high
of $954 but then settled up just $2.30 at $946 an ounce on the
COMEX division of the New York Mercantile Exchange.
Spot gold <XAU=> traded at $943.70 an ounce at 3 p.m. EDT
(1900 GMT), up from $941.40 an ounce late in New York on
Monday.
The dollar dipped against a basket of six major currencies
after data showed prices of U.S. single-family homes rose for a
second straight month in June and consumer confidence rose more
than expected in August.
The dollar was also knocked by a recovery in equity
markets, as Ben Bernanke's reappointment as Federal Reserve
chairman was seen as likely to encourage investors to take on
riskier trades. []
A weaker dollar often lifts gold, which can be bought as an
alternative to the unit.
Wall Street stocks rose after the U.S. data, with the S&P
500 <.SPX> hitting a 10-month intraday high in the morning. The
stock market also retreated from early gains.
JEWELERS ON SIDELINES
Demand for gold was soft, with jewelers in India, the
world's largest bullion buyer, keeping to the sidelines in
anticipation of further price falls.
Among other precious metals, palladium prices rose to their
highest level in nearly a year as hopes for an improvement in
the balance of supply and demand and gains in gold boosted
interest in the autocatalyst material.
"People are looking at ways to leverage off the expected
turnaround in the auto industry," said Mitsubishi Corp precious
metals strategist Tom Kendall. "As sales pick up, they are
looking for palladium to be the chief beneficiary, as opposed
to platinum, with the substitution story continuing."
Spot palladium <XPD=> was at $285.50 an ounce against
$279.50, having earlier touched a high of $287.50, its highest
price since early September last year.
The world's No. 2 platinum producer, Impala Platinum, said
a strike had halted its largest operations in South Africa, and
it was unclear how long the industrial action would last.
[]
South Africa produces four-fifths of the world's platinum.
Platinum <XPT=> rose to $1,240.50 from $1,236.50 an ounce,
while silver <XAG=> was at $14.27 an ounce against its previous
finish of $14.13.
(Reporting by Frank Tang and Jan Harvey; Editing by David
Gregorio)
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 946.00 2.30 0.2 884.30 7.0
US silver <SIU9> 14.310 0.115 0.8 11.295 26.7
US platinum <PLV9> 1247.80 -0.30 0.0 941.50 32.5
US palladium <PAU9> 288.80 3.45 1.2 188.70 53.0
Prices at 3:01 p.m. EDT (1901 GMT)
Gold <XAU=> 943.75 2.35 0.2 878.200 7.5
Silver <XAG=> 14.27 0.14 1.0 11.30 26.3
Platinum <XPT=> 1240.50 4.00 0.3 924.50 34.2
Palladium <XPD=> 285.50 6.00 2.1 184.50 54.7
Gold Fix <XAUFIX=> 950.50 -1.00 -0.1 836.50 13.6
Silver Fix <XAGFIX=> 14.110 -0.300 -2.1 14.760 -4.4
Platinum Fix <XPTFIX=> 1243.00 0.00 0.0 1529.00 -18.7
Palladium Fix <XPDFIX=> 288.00 0.00 0.0 365.00 -21.1
