(Corrects lead to say palladium hit 17-month highs, not
* Gold recovers on weak dollar; thin demand limits rebound
* Palladium surges on fund buying activity
By Barani Krishnan and Clara Denina
NEW YORK/LONDON, Feb 12 Gold rebounded from a
six-week low to trade flat on Tuesday as the dollar fell, while
palladium hit 17-month highs after funds chased up prices of the
jewelry- and autocatalytic- making metal deemed to be in short
The dollar fell versus the euro and yen after the Group of
Seven rich nations said it remained committed to
market-determined exchange rates, and that fiscal and monetary
policies must not be directed at devaluing currencies.
The spot price of gold, which initially tumbled to
$1,638.82 an ounce, its lowest since Jan. 4, hit a session high
of $1,663.81 after the G7 statement boosted the precious metals'
appeal as a dollar hedge.
By 2:30 p.m. ET (1930), gold's spot price hovered around
$1,650, versus the late Monday afternoon level of $1,649.36.
GOLD CLAWS BACK LOSS
While it had clawed back from the day's low, analysts said
gold could not rally as investors seemed to be drawn more to the
brightening global economic picture that called for lower
dependence on safe-haven assets such as bullion -- and more risk
appetite in investments like stocks and commodities.
Lunar New Year holidays in China and a few Asian countries
this week have crimped demand in the physical as well as futures
markets of gold, traders said.
Some noted that gold also failed to reprise its safe-haven
role in Tuesday's trading after the Iran-Israel nuclear spat
flared anew and North Korea confirmed it conducted an
underground nuclear test.
"It was an extremely quiet day in gold," said Frank McGhee,
head precious metals trader at Chicago's Integrated Brokerage
Services. "The market tried a couple of times at least to get
past the $1,638 high, but there was no follow-up buying."
That was quite a contrast to the activity in palladium and
platinum, which are collectively known as the platinum group
metals and used in making jewelry and auto catalytic converters.
PGMs have soared in value since the middle of last year due
to concerns about shrinking output due to mining disruptions in
South Africa and a drop in supply from Russia. Expectations of
robust automotive sales have also boosted prices.
In Tuesday's market, palladium's spot price surged
nearly 2 percent to $772 an ounce -- a high dating back to Sept.
5, 2011 -- before paring gains to trade at around $768.
Palladium hovered near $756 late Monday.
Platinum also rallied, though it came short of setting a new
milestone. The spot price of platinum was up 1.6 percent
at $1,712.49 an ounce versus the previous session's level of
Gold has underperformed the two metals since the start of
the year as signs of improved economic recovery around the world
-- particularly in the auto industry -- pushed hedge funds and
other major speculators towards platinum and palladium.
"Alternative and more volatile assets, including PGMs, offer
better returns away from gold" now, said Andrey Kryuchenkov,
analyst at Moscow-based commodities broker VTB.
(editing by Gunna Dickson)