* Dollar index recovers losses after U.S. bank results
* Oil prices retreat from 2009 highs as equities pare gains
* Gold buying picks up in India for Dhanteras festival
(Updates prices, adds comment)
By Jan Harvey
LONDON, Oct 15 (Reuters) - Gold prices fell below $1,050 an
ounce in Europe on Thursday as the dollar index <.DXY> recovered
early losses and equity markets retreated after third-quarter
results at major U.S. banks disappointed some investors.
Spot gold <XAU=> fell as low as $1,048.40 and was bid at
$1,049.90 an ounce at 1157 GMT against $1,061.90 late in New
York on Wednesday.
The metal had already declined in earlier trade as investors
cashed in gains amid concerns a rally which took the precious
metal to a record $1,070.40 in the last session was overdone.
"I wouldn't be at all surprised if towards the end of this
week we started to get some more meaningful moves on the
downside," said Simon Weeks, head of precious metals at the Bank
of Nova Scotia.
"There is a lot of open interest on the speculative side,
ETFs are holding very high inventories but not actually doing
doing anything significantly further, (and) producers have
pretty much all bought back (hedged positions)."
The dollar index, which measures the U.S. currency's
performance against a basket of six others, recovered from the
14-month lows it hit early on Wednesday after Goldman Sachs
earnings disappointed some in the market. []
A strong dollar tends to pressure gold, as it curbs the
metal's appeal as an alternative asset and makes it more
expensive for holders of other currencies.
European shares and U.S. stock futures pared gains after
earlier hitting a one-year high for a second straight session,
as investors backed off after results from Goldman Sachs.
[]
Oil prices turned negative as shares faltered, after earlier
hitting a year-high of $75.96 a barrel after U.S. industry data
showed a decline in crude stockpiles. []
Appreciating oil prices, often seen as a trigger for rising
inflation, usually lift gold.
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange fell $14.00 to
$1,050.70 an ounce.
INDIAN DEMAND PICKS UP
Physical demand for gold picked up in India for the
Dhanteras festival, typically an auspicious time for gold
buying, as prices softened. India was the world's biggest gold
consumer last year. []
But while demand is higher than in recent weeks, it is down
on a year ago, dealers said. Demand for gold exchange-traded
funds was soft, with holdings of the largest, New York's SPDR
Gold Trust <GLD>, unchanged for a fifth session on Wednesday.
The support lent to gold prices by speculation in New York
gold futures, as opposed to underlying physical demand
suggests a period of consolidation may be due, analysts said.
"In view of the large amount of speculative net-long
positions, the risk of a correction is increasing," said
Commerzbank in a note. "Notably, the price gains of the past few
days were not accompanied by meaningful inflows into gold ETFs."
Among other precious metals, silver <XAG=> was at $17.43 an
ounce against $17.85, tracking the correction in gold, while
palladium <XPD=> was at $322 against $326.50.
Platinum <XPT=> was at $1,341.50 an ounce against $1,358,
having hit a 13-month high of $1,362.50 an ounce on Wednesday.
"Platinum is holding onto its gains to new highs," said
technical analysts at Barclays Capital in a note. "Such price
action is encouraging for further gains into the $1,400 area."
(Editing by Keiron Henderson)
