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Gold retreats from record as dollar recovers

NEW YORK/LONDON (Reuters) - Gold closed lower on Thursday, retreating from a record high after the dollar rose broadly on doubts of a lasting economic recovery.

Gold bars are pictured at the Ginza Tanaka store in Tokyo October 23, 2009. REUTERS/Issei Kato

Spot gold hit a record $1,122.85 an ounce in Asian trade, helping lift other precious metals, with palladium, platinum and rhodium all reaching their highest in more than a year.

Bullion is viewed as a hedge against a falling U.S. currency. Peter Buchanan, commodities analyst at CIBC, said expectations of dollar depreciation has been a large factor driving gold higher.

“Gold’s weakness (on Thursday) was a reflection of profit taking after the metal’s recent impressive run,” Buchanan said.

Spot gold was at $1,107.20 an ounce at 2:51 p.m. EDT (1951 GMT), down from $1,117.45 late in New York on Wednesday.

U.S. December gold settled down $8 at $1,106.60 an ounce in the COMEX division on the NYMEX.

The dollar index .DXY rose after U.S. weekly jobless claims came in lower than expected. Data showed initial state jobless benefit claims fell to 502,000 in the latest week from a revised 514,000 a week before.

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But overall the dollar remained vulnerable to further losses, analysts said.

Tobias Merath, head of commodity research at Credit Suisse, said a weekly close above the $1,100 for gold would be important.

“We see continuous inflows from financial investors almost on a daily basis, real interest rates are still lower and the dollar is weakening, so the three pillars of this gold rally are still in place,” he said.

S.AFRICA OUTPUT DROPS

South Africa, formerly the world’s biggest gold producer and now number three, said its gold output dropped 9.3 percent in volume terms in September.

Sales of scrap gold are increasing in India, the world’s biggest bullion consumer last year, dealers said, as higher prices encourage consumers to sell gold back to the market.

Demand for gold in India remained weak, with some traders waiting for prices to soften before placing fresh orders in the middle of the wedding season, which will last until December.

The chief executive of Barrick Gold Corp ABX.TO, the world's biggest gold miner, told the Financial Times gold may ease from current highs, although the chances of prices falling below $900 an ounce are slim.

Among other precious metals, spot silver was at $17.51 an ounce against $17.57, tracking gold.

Palladium, platinum and rhodium all hit their highest level in more than a year on a wave of speculative buying of the precious metals used in autocatalysts.

Palladium reached its highest since August 2008 at $356.75 an ounce, while platinum struck a 14-month high of $1,379 in early trade. Later platinum eased to $1,353 from $1,368, while palladium rose to $349.50 from $341.50.

“A lot of people think PGMs could outperform gold,” said Calyon metals analyst Robin Bhar. “People are playing the recovery hopes for autocatalyst demand.”

Reporting by Frank Tang; Editing by David Gregorio

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