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Gold retreats from near eight-year peak as dollar rebounds

(Reuters) - Gold dipped on Tuesday as investors booked profits after bullion rallied to a near eight-year peak and as demand for dollars rose amid a new surge in COVID-19 cases.

FILE PHOTO: An employee holds a 1kg gold bar at AGR (African Gold Refinery) in Entebbe, Uganda, October 4, 2018. REUTERS/Baz Ratner

Spot gold slipped 0.3% to $1,777.72 per ounce by 1213 GMT after earlier touching a high of $1,786.91, just short of Wednesday’s nearly eight-year peak of $1,788.96.

U.S. gold futures fell 0.4% to $1,785.70 per ounce.

“Even though the underlying support remains strong and demand is still on the up, the fact that we’re so close to a key level of resistance has attracted some light profit-taking,” Saxo Bank analyst Ole Hansen said.

But he said downside risks were limited and a weaker dollar could help gold climb towards $1,800.

India, the world’s second biggest gold consumer, overtook Russia on Monday to record the world’s third-highest number of COVID-19 cases.

“The strict curfew in India means that hardly any gold has been sold or imported there for months,” Commerzbank said.

Record increases in novel coronavirus infection in the United States prompted U.S. cities to roll back reopening plans.

The dollar .DXY rebounded from a two-week low, while European equities fell on concerns about a deeper-than-feared euro zone recession.

“We seem to be bouncing between days of v-shaped optimism and second wave anxiety, creating this very jittery market and we’re seeing that in gold as well,” OANDA analyst Craig Erlam said.

Elsewhere, palladium fell 1.4% to $1,912.83 per ounce, while platinum rose 0.8% to $819.77 per ounce.

Silver shed 0.7% to $18.08 per ounce.

Reporting by Nakul Iyer in Bengaluru; Editing by Barbara Lewis and Edmund Blair