Physical demand was also supportive for the precious metal, traders said, who saw the jewellery demand picking as as the festive period in India, one of the top gold consumers of the world, approches.

Spot gold was at $991 an ounce by 1121 GMT, slightly up from $990.95 an ounce late in New York on Friday, when gold hit a two-week low of $984.70 an ounce.

“The stronger dollar is the reason which pushed gold below the $1,000 an ounce level,” said Eugen Weinberg, Commerzbank analyst said. “On the other hand, we’d expect a pick-up in physical demand if prices decline ahead of the festive season.”

Gold’s inverse relationship with the dollar over the past few weeks has become stronger. It is often considered an alternative asset to the greenback, while a higher dollar makes commodities expensive for holders of other currencies.

The dollar fell against the yen but rose against higher-yielding currencies including the euro and the Australian and New Zealand dollars. But the euro trimmed earlier losses to trade at $1.4655.

“The dollar feels like it has to go much lower from where it is and gold could benefit from that,” said Afshin Nabavi, head of trading at MKS Finance.

Over two weeeks ago, gold hit $1,023.85 an ounce, its highest in eighteen months, within a striking distance of its record high of $1,030.80 an ounce struck in March 2008.

BARGAIN HUNTERS

But bullion’s failure to stay above $1,020 an ounce level has disappointed several investors and prompted an unwinding of long positions, which in the U.S. hit a record high for a third straight week.

“We’re seeing some long liqudiation from the speculative side of the market. The major support is at $975 an ounce,” Nabavi said.

The non-commercial net long position in gold futures on the COMEX division of the New York Mercantile Exchange stood at an all-time high of 236,749 lots for the week ended Sept. 22, figures from the Commodity Futures Trading Commission showed.

“Having said that the reason why gold is gradually falling and not crashing is bargain hunters and physical buyers are picking up the dips,” Nabavi said.

U.S. gold futures for December delivery was up 0.14 percent to $993 an ounce from $991.6 per ounce on the COMEX division of the New York Mercantile Exchange. On Friday, the contract fell $7.30.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , said its holdings stood at 1,094.107 tonnes on Friday, unchanged from the previous business day.

Silver was lower at $15.96 from $16.00

“Silver is generally vulnerable to Comex profit-taking,” said analyst John Reade at UBS in a research note. “The fact that the surge in Comex speculative longs over the past three weeks has struggled to lift silver prices further flags a specific downside risk over the coming weeks.”

Platinum was at $1,273 from $1,272.5 and palladium was at $289 from $288.

Sept 28 (Reuters)

Bill O’Neill, managing partner of New Jersey-based LOGIC Advisors, said that asset-diversification demand for gold and other precious metals by jittery investors amid shaky equities markets propelled gold’s rally.

Spot gold hit an intraday peak of $992.55, which marked the highest price since Feb. 24. It was at $989.10 an ounce at 12:07 p.m. EDT (1607 GMT), against $976.60 an ounce late in New York on Wednesday.

U.S. December gold futures were up $10.70 at $989.20 an ounce on the COMEX division of the New York Mercantile Exchange.

Fears that U.S. payrolls data may disappoint sparked a flight to quality among investors on Wednesday. The metal broke out of its previous $930-$960 range as a move through technical resistance above $960 sparked a rally.

VTB Capital analyst Andrey Kryuchenkov said gold’s immediate move had been largely technical, with the dollar offering little support and physical demand weakening as prices rose.

Gold will need to hold its current levels to build a base for further gains, he said. “If we close above $980, we will retest $990, and probably stay in this range,” he said.

The dollar index <.DXY>, which measures the U.S. currency’s performance against a basket of six major currencies, initially softened early on Thursday, boosting interest in gold as an alternative asset and driving prices to fresh highs.

The market was awaiting fresh clues on the economic outlook from Friday’s payrolls numbers. Investors were spooked after a U.S. employment report released on Wednesday showed more private sector job losses than expected.

The data will be closely watched for its impact on the dollar, and its subsequent effect on gold. The metal is set to benefit from renewed demand if the U.S. currency slips further.

STRONG INVESTMENT

“Investment demand for gold is still very strong, and that is going to help drive the price higher over time,” said Helen Henton, head of commodities at Standard Chartered. “We think it’s going to break $1,000 by Q4, mainly driven by a weakening U.S. dollar.”

Silver tracked gold higher to reach its highest level since June at $15.92 an ounce, and was at $15.84, against $15.34 on Wednesday.

It outpaced base metals such as copper, with which silver, as an industrial as well as an investment metal, often moves.

“Silver has fully participated in this (rally) and yet, while base metals have picked up a bit in the last 18 hours, they were definitely on the defensive,” said Stephen Briggs, an analyst at RBS Global Banking & Markets.

“Silver has managed to ignore that, which is interesting.”

Among other precious metals, platinum was at $1,244 an ounce against $1,229, while palladium was at $288.50 against $284.50.

Impala Platinum, the world’s second largest miner of the metal, said on Thursday some workers at its operations had returned to work after a strike, but said no wage deal had been reached with the union.

Sept 3 (Reuters)

But gains were capped by a slight recovery in the U.S. dollar and by a reduction in the metal’s appeal as a haven.

Spot gold was bid at $954.40 an ounce at 1444 GMT, against $949.65 an ounce late in New York on Monday. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $2.70 to $956.20.

The data from the Institute of Supply Managers showed the U.S. manufacturing sector returned to growth in August after a prolonged slump, while pending home sales raced to a two-year high in July.

The news boosted U.S. stock markets, while European shares pared earlier losses.

Simon Weeks, head of precious metals at the Bank of Nova Scotia, said the news was mixed for the gold market.

“On the one hand, it is weaker as people unwind safe haven positions and put risk on again, and on the other, it is high due to increased concerns over inflationary pressure,” he said.

“There is so much going on this week in terms of data, the ECB meeting and then the G20 that it will probably be next week before people have a clear understanding of how they want to position themselves,” he added.

Analysts said ahead of the data that a positive view of the economy could help ailing jewellery and industrial sales, which have proved a drag on prices in recent months. The dollar index <.DXY> was a touch firmer after the data.

Oil prices rose more than $1 a barrel, meanwhile, after the data boosted hopes for an economic recovery, while prices of industrial metals such as copper pared losses.

Gold demand in India, the world’s largest bullion market last year, abated as traders awaited further price falls. Some buying was seen after prices slipped below $950 an ounce, but this had not persisted, traders said.

IMPORTS FALL

India’s gold imports fell to 12-14 tonnes in August from 98 tonnes a year before as high prices and weak monsoon rains dented demand, the head of the Bombay Bullion Association said.

Gold imports to Turkey, one of the top three consumers of the metal, also fell 74 percent year-on-year to 12.517 tonnes, as demand in the local market weakened.

Among other precious metals, silver firmed to $14.95 an ounce against $14.89, while platinum was at $1,234 an ounce against $1,237 and palladium was at $289 against $288.50.

Palladium rose to a year high of $291.50 an ounce in earlier trade, helped by hopes demand for the autocatalyst material may recover and strength in other precious metals.

“Palladium… has the potential to test the $300-05 area, however we remain concerned about the level of speculative longs in the market,” said The BullionDesk.com analyst James Moore.

“(These) leave the metal vulnerable to a rapid correction should those longs become spooked.”

Talks between South Africa’s mine workers’ union and Impala Platinum began on Tuesday in an attempt to end a strike over wages. Platinum’s gains have been capped by weak demand from carmakers and the perception above-ground stocks are plentiful.

Sept 1 (Reuters)

The positive link between gold and equities market has been on the rise, as the metal is used as a hedge against inflation and erosion of portfolio values.

“The markets today are focusing on China and the sharp break of the Shanghai equities index,” said Bill O’Neill, managing partner of New Jersey-based LOGIC Advisors.

“In recent weeks, we noted the weakness in the equities, of course, has had a positive relationship with commodities, and that continued to be a factor,” he said.

Global stocks fell on Monday, dragged by a six percent tumble in China, which sent nervous investors into the yen for safe haven. Wall Street was off about 1 percent in afternoon trade.

U.S. December gold futures settled down $5.30 at $953.50 an ounce on the COMEX division of the New York Mercantile Exchange.

Spot gold was at $951.70 an ounce at 2:03 p.m. EDT (1803 GMT), against $954.45 an ounce late in New York on Friday.

Weakness in oil prices, which fell over $3 to under $70 per barrel, and a sharp rise of the yen against the dollar amid risk aversion, are both weighing on gold.

Afshin Nabavi, head of trading at MKS Finance, said price volatility had also been exacerbated by holiday-thinned trade, with the London market closed for the bank holiday.

Gold typically trades in a close negative relationship with the dollar, as it is often bought as an alternative investment. Like all dollar-priced assets, it also becomes cheaper for holders of other currencies as the U.S. unit softens.

Meanwhile, a report that Chinese state-owned companies will be allowed to walk away from loss-making commodity derivative trades also struck a nerve among metals traders.

James Steel, chief commodities analyst at HSBC in New York, said that the news “played an element” in weighing down on gold.

JEWELRY DEMAND IN FOCUS

The precious metal is taking little direction from underlying demand or supply issues over the seasonally quiet summer period, analysts said.

Frank Holmes, chief executive of U.S. Global Investors, said that while gold has historically risen in the month of September on the back of strong global jewelry demand, it could be challenging this year due to the economic slowdown and the high price of bullion.

Texas-based U.S. Global manages over $2 billion in fund assets.

Silver, meanwhile, turned higher due to strong demand from Asia, analysts said. Silver, which is a largely industrial metal, has recently outperformed gold on the back of better economic sentiment.

Holdings of the world’s largest silver-backed ETF, the iShares Silver Trust , also fell almost 82.6 tonnes, or 1 percent, last week. Spot silver was at $14.87 an ounce against $14.74.

Platinum prices were a touch softer, pressured by a decline in prices of industrial commodities such as oil. Platinum was at $1,236 an ounce against $1,244, while palladium was at $289 against its previous finish of $287.

Close Change Pct 2008 YTD

Chg Close Pct Chg US gold 953.50 -5.30 -0.6 884.30 7.8 US silver 14.923 0.108 0.7 11.295 32.1 US platinum1244.00 -1.90 -0.2 941.50 32.1 US palladium 293.50 1.15 0.4 188.70 55.5 Prices at 2:01 p.m. EDT (1801 GMT) Gold 951.30 -3.15 -0.3 878.200 8.3 Silver 14.88 0.14 0.9 11.30 31.7 Platinum 1235.50 -8.50 -0.7 924.50 33.6 Palladium 290.00 3.00 1.0 184.50 57.2

Aug 31 (Reuters)

Spot gold hit a high of $961.00 an ounce, its firmest level since Aug. 7, and was bid at $955.10 an ounce at 1434 GMT, against $946.75 an ounce late in New York on Thursday.

Prices rose after heavy selling of the dollar late on Thursday, particularly against the Swiss franc, knocking the U.S. currency to multi-week lows versus the euro.

“In the near term is it still predominantly the currency that is in the driving seat,” said Saxo Bank senior manager Ole Hansen.

“That has managed to tip (gold) through a technical level where new buying and short covering has been triggered this morning, and that has given us a bit of momentum on the upside.”

Gold typically moves in a close inverse relationship with the dollar, as it becomes cheaper for holders of other currencies as the U.S. unit softens. Gold was also being bought as an alternative asset to the falling dollar.

“We touched these highs yesterday in the euro-dollar, and we haven’t really come back from that,” said Hansen. “The euro has elevated to slightly higher levels now, and that has given (gold) the support that’s needed now to test higher.”

The U.S. unit was little changed on Friday versus a currency basket, but lifted from lows against the euro after data showed consumer confidence fell to its lowest in four months in August, denting interest in currencies seen as higher risk.

Oil climbed after Thursday’s better-than-expected U.S. GDP and jobs data boosted interest in nominally higher-risk assets like equities and commodities.

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $9.70 to $957.00 an ounce, off a high of $964.60.

SILVER RISES

Silver was also helped by gains in base metals, with copper up more than 4 percent. Silver, also used as an industrial metal, rose to $14.70 an ounce from $14.24.

On the wider markets, European shares rose more than 1 percent on Friday, while U.S. stocks were higher, though they also pared gains after the consumer sentiment data.

Platinum was supported by a strike at South Africa’s Impala Platinum and news that a union had rejected the latest wage offer from Anglo Platinum , the world’s largest producer of the metal.

Platinum was at $1,242 an ounce against $1,240.50, and palladium was at $286 against $284. South Africa is the source of four-fifths of the world’s platinum.

The National Union of Mineworkers said Implats, the world’s number two platinum producer, had failed to secure a court order to stop the strike. Some workers at its Rustenburg mine have been on strike since Wednesday.

But a rise in platinum stocks after demand fell for the autocatalyst material, news of capacity cuts from Toyota earlier this week, and hopes industrial action will be resolved quickly are limiting gains, analysts said.

“The market reaction to these supply interruptions help confirm our view that this is not an attractive tactical entry point into new long platinum positions,” said UBS analyst John Reade in a note.

Aug 28 (Reuters)

But prices remained rangebound as traders awaited clearer direction from the currency markets.

Spot gold was bid at $941.80 an ounce at 1523 GMT, against $943.55 an ounce late in New York on Tuesday. Earlier it rose as high as $949.85.

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange were down $1.8 at $944.20 an ounce.

“We are probably going to stay fairly rangebound,” said Standard Bank analyst Walter de Wet. “We would have to see some decent dollar weakness for gold to move above $956-960.”

The dollar rose versus the euro and a currency basket, reversing early losses, after durable goods numbers from the United States.

The data showed June orders for durable goods, excluding transportation, rose less than forecast despite overall orders posting their largest advance since July 2007.

The report, however, was tempered by data showing a jump in U.S. new home sales last month that fuelled some selling in the dollar versus the euro.

U.S. stocks advanced after they July new home sales data, while European stocks gave up early gains to fall by early afternoon.

Demand from buyers of physical bullion remained sluggish as buyers awaited further price falls.

“Physical demand has dried up, but we are expecting more buying around $930-925,” said Commerzbank senior trader Michael Kempinski.

The world’s largest exchange-traded fund, the SPDR Gold Trust , said its holdings fell another 4.58 tonnes on Tuesday, bringing its total outflow to 21.4 tonnes in the last four weeks.

LONDON ETF HOLDINGS RISE

But London-based ETF Securities said it saw the biggest ever one-day inflow into its ETF Physical Gold product on Aug. 25. Its holdings rose 211,500 ounces to 3.190 million ounces on Tuesday.

On the supply side, the Russian Gold Industrialists’ Union reported a 21 percent rise in gold output from Russia, the world’s fifth largest producer of the yellow metal, in the first seven months of the year.

Platinum received an early fillip from a strike at Impala Platinum’s Rustenberg mine in South Africa, where workers rejected the company’s latest pay offer on Wednesday.

Prices rose as high as $1,249.50, but later eased to $1,233 an ounce from $1,239 as investors took profits. “The price of platinum reacted only marginally to the news,” said Commerzbank in a note.

An Implats spokesman said more than 20,000 workers were involved in the strike, ignoring a weekend call from the National Union of Mineworkers to suspend the action.

Separately, Aquarius Platinum said contract workers at its Kroondal and Marikana operations in South Africa had launched a strike.

Palladium was at $283 against $286. Silver was at $14.24 an ounce against $14.24.

Aug 26 (Reuters)

Spot gold hit an intra-day high of $961.00 an ounce, its highest since June 11, and was bid at $959.10 an ounce at 1329 GMT, against $953.90 an ounce late in New York on Friday.

U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $5.70 to $959.40 an ounce.

“At the moment we’re seeing the dollar as the key factor to movements in the gold market,” said Eugen Weinberg, senior analyst at Commerzbank.

“In the past few months (gold) has gone from being a safe haven to becoming a dollar play. The dollar right now is so weak because no one is looking for a safe haven — because corporate results are so good and stock markets are performing so well.”

Silver was at $14.40 an ounce against $13.89, earlier it touched a high of $14.47, the highest since mid-June.

“Silver tracks gold in both directions,” Weinberg said.

The dollar hit a 2009 low versus a basket of currencies, stung by buoyant risk demand. The dollar index <.DXY>, a gauge of the U.S. currency’s performance against six other major currencies, fell to its lowest since December.

Appetite for risk was boosted by rising stock markets. European shares hit a nine-month high, as financials advanced after earnings results from Europe’s biggest bank HSBC cheered investor sentiment.

Rising equity markets also boosted interest in oil, with prices hitting a one-month high. Stronger crude prices support interest in gold as a hedge against oil-led inflation.

SILVER INFLOWS

Silver took further support from fresh inflows into exchange-traded funds last week.

The largest silver ETF, the iShares Silver Trust, said its holdings rose to a record 8,828 tonnes on Friday, while Switzerland’s Zurich Cantonal Bank said its silver holdings rose 1.929 million ounces last week.

Investment demand for gold and jewellery buying remain lacklustre, however. Holdings of the largest gold ETF, the SPDR Gold Trust , fell nearly 50 tonnes in July.

ETFs issue securities backed by physical commodities, and constituted a big source of gold demand in the first quarter.

Jewellery demand was also weak as Indian consumption softened on the back of higher prices. “Traders are waiting for lower prices,” said one dealer.

Among other precious metals, platinum was at $1,218.50 an ounce against $1,207.50, while palladium was at $267.50 against $261.50. Platinum traders are awaiting U.S. car sales data due later in the day for direction.

Government measures to boost demand for new cars supported European car sales in July, data showed, with French sales rising 3.1 percent, helping to lift both platinum and palladium which are chiefly used in automobile production.

“We view the development in vehicle sales as a positive signal,” Standard Bank said in a note. “We view this as a bullish signal for platinum, palladium, aluminium demand.”

In Japan industry-wide auto sales fell 5.2 percent in July from a year earlier.

LONDON, Aug 3 (Reuters)

U.S. data showed the number of U.S. workers filing new claims for jobless benefits rose slightly more than expected last week, but a gauge of underlying labor trends fell for a fifth straight week.

Spot gold was bid at $933.50 an ounce at 1311 GMT, against $929.00 an ounce late in New York on Wednesday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $6.20 to $933.40 an ounce.

“If this is welcomed by the equities market and triggers a fresh boost, that could benefit gold,” said CMC Markets strategist Ashraf Laidi.

The dollar was down 0.39 percent at 79.3 against a basket of currencies and was lower against the euro following the data. Traders are now eyeing U.S. data on second-quarter GDP due on Friday for clues as to the next direction of the economy.

European shares rose as investors digested a raft of broadly positive corporate earnings, while U.S. stock futures extended gains after the jobs report.

Oil was also boosted by stock markets and rose above $64 a barrel. Firmer crude prices can support gold, which can be used as a hedge against oil-led inflation.

Gold demand in India, the world’s biggest bullion consumer, is recovering after recent price falls, but a further decline will be needed for buying to significantly recover.

“There are advance orders in decent quantities in the range of $900-920 an ounce,” said one dealer with a state-run bank.

Overall demand in India remains weak, however. The country’s gold imports have reached a provisional 8-10 tonnes in July so far, well below the 24 tonnes recorded last June, the Bombay Bullion Association said.

INVESTMENT SOFT

Investment demand for gold remained soft, however, as ETF holdings slipped further. Holdings of the largest bullion ETF, the SPDR Gold Trust, fell over 10 tonnes on Wednesday, and are down nearly 48 tonnes in the last four weeks.

Jason Toussaint, managing director for exchange-traded gold with the World Gold Council, said there was evidence investors were selling out of the SPDR fund to buy shares.

Analysts fear a broader liquidation of ETF gold holdings resulting from a recovery in risk appetite could jeopardise gold’s gains.

“Without strong physical demand to absorb metal coming back into the market and with funds cutting long exposure, the metal is at risk of a deeper correction,” said TheBullionDesk.com analyst James Moore.

On the supply side, the world’s largest gold producer, Barrick Gold , said it produced 1.87 million ounces of gold in the second quarter and is on track to meet its 2009 output target of 7.2-7.6 million ounces.

Among other precious metals, silver tracked gold up to $13.44 an ounce against $13.28. Spot platinum was at $1,177 an ounce against $1,170, while spot palladium was at $255 against $252.50

LONDON, July 30 (Reuters)

A slide in oil prices is also undermining support for gold, analysts said.

Spot gold was at $947.85 an ounce at 1402 GMT, against $948.15 an ounce late in New York on Tuesday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange were up $1.30 at $948.20 an ounce.

“We are stuck in a range,” said Afshin Nabavi, head of trading at MKS Finance in Geneva. “We have to break below $944 or above $955 in order to see some interest in the market.”

“With stocks opening lower and the euro not performing that (well), gold could test the lower end of its range,” he added.

The dollar <.DXY> was steady versus a basket of six major currencies on Wednesday, with the euro declining and the yen firming, as risk appetite worsened after a weak earnings report from Morgan Stanley .

A weaker dollar supports commodities priced in the U.S. unit, such as gold, as it makes them cheaper for holders of other currencies.

Oil also slipped on Wednesday, falling below $65 a barrel, as a surprise rise in U.S. crude stocks pressured prices. U.S. stock markets opened weaker, but soon pared losses.

Standard Bank analyst Walter de Wet said $960 an ounce was proving to be a major resistance level for gold prices.”I would look towards the dollar for any major moves in gold,” he said.

“Our view for currencies is that the euro will reach $1.50 towards the end of the year. If that is going to be the case, I don’t think $960 is going to hold as a strong resistance.”

Gold last stood above $960 in early June.

SOFT DEMAND

The world’s largest gold exchange-traded fund recorded a further outflow on Tuesday. The fund, New York’s SPDR Gold Trust , has sold nearly 39 tonnes of gold in the last four weeks, equal to almost 3.5 percent of its total holdings.

Jewellery demand in India, the world’s largest gold consumer, remained slack as buyers awaited lower prices, while jewellers in Thailand cashed in their bullion on Wednesday after prices broke through $950 an ounce.

Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, said buying had been muted since gold hit five-week highs earlier this week. “Maybe people think the stock market is more attractive,” he said.

Among other precious metals, silver was at $13.52 an ounce against $13.54, platinum was at $1,164.50 an ounce from, $1,169, and palladium was at $254 against $253.50.

Impala Platinum , the world’s number two platinum miner, closed parts of its Rustenburg mine in South Africa after an accident killed nine workers.

“The National Union of Mineworkers is calling for Implats’ entire operations to be shut down and investigated,” said Fairfax analyst John Meyer in a note. “Should industrial action follow, then there could be some impact to platinum prices.”

Elsewhere in South Africa, gold producers raised their pay offer for miners on Tuesday, averting possible strike action for now, according to the mineworkers’ union.

South Africa was the world’s number three gold miner in 2008 after China and the United States, metals consultancy GFMS said.

July 22 (Reuters)

Spot gold was bid at $912.50 an ounce at 1417 GMT, against $908.45 an ounce late in New York on Wednesday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $3.50 to $912.80 an ounce.

Gold sold off on Wednesday in line with other commodities, slipping to an eight-week low, after the U.S. Commodity Futures Trading Commission said it was considering a clampdown on excessive speculation in commodities.

Afshin Nabavi, head of trading at MKS Finance in Geneva, said the slip was met with some light physical buying in the Far East and Europe.

“We saw some small demand out of the Far East this morning,” he said. “But India and the Middle East is still very quiet.”

“Also, the U.S. dollar is a bit weaker today,” he added.

The dollar gave back some of the previous session’s gains on Thursday as equities firmed in Europe and U.S. stock futures rose, denting interest in the currency as a haven from risk.

A recovery in stock markets after a five-day losing streak, gains in industrial commodities such as oil and base metals and a less cautious tone to currency markets suggested recent sessions’ heavy risk aversion may be abating.

Oil’s tick higher also helped support gold, which can be bought as a hedge against oil-led inflation.

Demand for gold investment products such as exchange-traded funds — a major support of prices earlier in the year amid volatility in other markets — remained sluggish, however.

Holdings of the world’s largest gold ETF, the SPDR Gold Trust , declined more than 10 tonnes on Wednesday, while those of ETF Securities’ ETFS Physical Gold product slipped 12,500 ounces 0.4 percent.

OUTPUT FALLS

In supply news, South Africa, the world’s third largest gold miner after China and the United States, said its output of the metal fell 10.5 percent in May from a year ago.

Among other precious metals, platinum was at $1,104.50 an ounce against $1,096, while palladium was at $235 against $231.50. Both metals are primarily used in car manufacturing as a component in catalytic converters.

Traders of palladium in particular were cheering news from China that its passenger car sales rose 47.7 percent in June from a year earlier.

Chinese cars are usually petrol-fuelled, meaning they use a higher proportion of palladium than platinum, which is a primary component in diesel catalysts.

Dealers say as palladium is still relatively expensive, it is unlikely to immediately post significant new gains, although platinum has met some interest.

“Even though there is very little obvious buying taking place right now, platinum is still managing to hold its head above $1,100,” said one analyst, adding strong turnover in Shanghai suggests good Chinese buying at these levels.

Elsewhere silver was at $12.85 an ounce against $12.84.

LONDON, July 9 (Reuters)