January 9, 2018 / 11:16 AM / 9 months ago

PRECIOUS-Gold drifts lower on Europe concerns, buoyant shares

    * Palladium hits record high at $1,111.40/oz
    * Platinum off 3-1/2-month peaks marked in previous session

 (Recasts with palladium record, updates prices; adds analyst
comments, NEW YORK to dateline)
    By Renita D. Young and Eric Onstad
    NEW YORK/LONDON, Jan 9 (Reuters) - Gold edged lower on
Tuesday, weighed down by a stronger U.S. dollar on the back of
concerns about political uncertainty in Europe, while a buoyant
stock market also drained enthusiasm for bullion.
    Palladium, meanwhile, recorded its third record high so far
in January, boosted by increased demand from the automotive
industry.
    Spot gold        was down 0.6 percent at $1,312.58 per ounce
by 1:36 p.m. EST (1836 GMT). Prices last week touched their
highest since Sept. 15 at $1,325.86.
    U.S. gold futures         for February delivery settled down
$6.70, or 0.5 percent, at $1,313.70 per ounce. 
    Palladium        was trading up 0.1 percent at $1,101.55 an
ounce after touching a fresh record high of $1,111.40.
    The dollar        was up 0.2 percent against a basket of
major currencies on Tuesday, making commodities priced in the
greenback more expensive for buyers using other currencies. It
hit a more than one-week high on Monday.       
    "The dollar has bounced back, partly due to weakness in the
euro," said Jonathan Butler, commodities analyst at Mitsubishi
in London.
    "There's also the continuing rally in the equity markets.
All of that has probably helped take the wind out of gold's
sails."
    The euro is being weighted down on concerns about upcoming
Italian elections, problems forming a German government and
lingering Brexit concerns, he added.
    Gold is also seeing profit-taking from its recent rally,
traders said.
    Global gold-backed, exchange-traded funds added 197.5 tonnes
in 2017, an 8.4 percent increase, the World Gold Council said.
            
    "The gold price was clearly finding support from inflows ...
into gold ETFs, meaning that inflows since the start of the year
have totaled almost six tonnes," Commerzbank said in a research
note. 
     But gold may edge lower soon, according to traders.
    "If it goes below the $1,240 level, then you’ll see a lot of
sell stops ... That'll be the first sign of the trend starting
to change," said Michael Matousek, head trader at U.S. Global
Investors in San Antonio, Texas.
    Though U.S. auto sales figures for December were in line
with expectations, palladium extended its 2018 rally.
    "There are still strong fundamentals coming from the
automotive industry, which uses catalytic converters in vehicles
to fight pollution," said Phillip Streible, senior commodities
strategist at RJO Futures in Chicago.
    "But there's a potential for profit-taking. Over the long
run, we might see more demand for electric vehicles." he added.
    Among other precious metals, spot silver        fell 0.93
percent at $16.98 an ounce.
    Platinum        dropped 0.9 percent at $963.74 an ounce
after hitting a 3-1/2-month peak on Monday at $973.60.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
editing by Louise Heavens and G Crosse)
  
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