Gold retreats from record high on profit taking

By Frank Tang and Atul Prakash

NEW YORK/LONDON (Reuters) - Gold retreated from record highs on Thursday as investors took profits, but the precious metal held within striking distance of $1,000 a troy ounce as the dollar struck an all-time low against the euro.

Spot gold jumped as high as $991.90 an ounce and was at $976.20/976.95 at 2:15 p.m. EST, up from an earlier low of $959.45, but still lower than $985.70/986.50 late on Wednesday in the U.S. market.

Platinum group metals finished sharply lower amid a broad-based metals pullback after top producer South America said it will let mines increase power consumption as the country's power crisis had stabilized.

"Guess some speculators just got cold feet, maybe after the news that power deliveries to mines in South Africa are going to be raised to 95 percent," said Wolfgang Wrzesniok-Rossbach, head of marketing at precious metals group Heraeus.

South Africa said it will let mines increase power consumption from 90 to 95 percent of normal because the country's power crisis has stabilized.

Traders said heavy profit-taking in thin markets were behind the fall in bullion prices.

"This is as simple as profit taking. The gold market is divorcing itself from the emotions and movements of the other markets," said George Nickas, precious metals broker of FC Stone in New York.

"People are just taking a temporary time-out. There is no fundamental news, and there are no technical signals to hang your head on," Nickas said.

Analysts still expect gold to break through the $1,000 level, but think it may take several forays.

Gold has gained nearly 20 percent in 2008 as funds, speculators and investors poured money into precious metals on expectation of further interest rate cuts in the United States and record-high oil, which lift its safe-haven appeal.

The dollar fell to lifetime lows against the euro after ECB President Jean-Claude Trichet said euro zone inflation risks were on the upside, dashing hopes of an interest rate cut in the near future.

News that U.S. home foreclosures and the rate of homes entering the foreclosure process rose to record highs added bearish investor sentiment towards the greenback.

Returns on U.S. holdings are eroding for foreign investors and many see precious metals as hard assets that can protect portfolios.

FOREGONE CONCLUSION

In overnight sessions, silver struck a 27-year high above $21 on strong speculative buying, platinum traded below an historical peak and U.S. gold futures held just near record highs around $995 an ounce.