Gold falls on investor disappointment, eyes $1,100

NEW YORK/LONDON (Reuters) - Gold slipped on Thursday, retreating from a record high it hit last session as disappointment over the metal's failure to breach $1,100 an ounce prompted investors to cash in some gains.

Gold's strength despite a relatively firm dollar this week suggests that bullion could be driven by other factors, such as renewed interest among central banks and inflation worries.

"The gold market has de-coupled itself from the dollar for the time being," said George Nickas, commodities broker at FC Stone.

On Tuesday, gold rallied $30 in the face of a broadly higher dollar, largely driven by improved sentiment after India's purchase of 200 tons of bullion from the International Monetary Fund.

Yet, analysts warned of possible short-term pullbacks in overbought market conditions.

"The market has run out of steam as we end the week. This market has to do some backing and filling to justify at these levels," Nickas said.

Spot gold was at $1,088.95 an ounce at 2:08 p.m. EST (1908 GMT), against $1,092.35 late in New York on Wednesday, when the precious metal hit a record high of $1,097.25 an ounce.

U.S. December gold settled up $2 at $1,089.30 an ounce on the COMEX division of the New York Mercantile Exchange.

Further gains were capped after the metal failed to decisively break above $1,100 an ounce.

"The fact that we didn't manage to go through $1,100 might lead some investors to reconsider their positioning in the sector," said Commerzbank analyst Eugen Weinberg.

"Should the dollar become stronger over the coming days I would expect to see more profit taking," he added. "I think... we will see a prolonged correction, because the trend of the last few weeks is becoming a bit too pronounced."

Friday's U.S. October non-farm payrolls data could give a clear direction to the dollar and set the tone for the gold market.

CENBANKS EYED

Speculation continued over the prospect of further central bank gold acquisitions, after India's purchase of 200 tons of bullion from the International Monetary Fund on Monday. The report helped push gold to record highs.

Sri Lanka's central bank said it had been buying gold for the last five or six months as it diversifies its reserves amid volatile markets.

A former adviser to the People's Bank of China poured cold water on the idea that the PBC will buy IMF gold, saying locally sourced bullion would be cheaper.

In the physical market, a report showed gold sales in Abu Dhabi fell by up to 30 percent in October on the year, as higher prices continued to keep consumers at bay.

Among other precious metals, spot silver was at $17.36 an ounce against $17.44. Holdings of the world's biggest silver-backed exchange-traded fund, the iShares Silver Trust, fell 3.85 tons on Wednesday.

Platinum was at $1,352.50 an ounce against $1,364, while palladium was at $328 against $327, its previous session's late quote. The metals, used mainly in autocatalysts, are both sensitive to car demand.

(Additional reporting by Pratima Desai in London; Editing by Christian Wiessner)