Gold rises in London

Gold eased in late business on Wednesday as a firmer dollar prompted bullion investors to consolidate gains from the metal's recent rally to 28-year highs, analysts said. But medium- to long-term sentiment remained bullish and the metal was expected to set new highs on a weaker dollar outlook, safe-haven buying and strong investor interest, they said.
Spot gold rose to $736.00 an ounce before falling to $728.10/728.60 by 1451 GMT, against $731.00/731.80 in New York late on Tuesday and this week's $747.65 - the highest since January 1980.
"We definitely lost a bit of momentum as we saw profit-taking that just capped the buying we'd seen previously. But that doesn't mean in our view that sentiment has taken a different direction," said Frederic Panizzutti, metals analyst at MKS Finance.
"After all the progress made on the upside, the market had to consolidate somewhere. We would not exclude further downside correction but short-medium term we remain very positive." The dollar rose to a one-month high against the yen and was marginally up against the euro after a report on the US services sector in September reflected growth in employment.
A firmer dollar makes gold costlier for other currency holders and often lowers bullion demand. "Profit taking after an aggressive rally is quite common, especially with gold having gone against gravity for one month in a row," said Pradeep Unni, precious metals analyst at Vision Commodities in Dubai. "But market willingness to buy on any retreat from the highs is still intact and, as long as it stays, aggressive sell-offs will be deferred."
In other bullion markets, benchmark August 2008 gold futures in Tokyo ended 3 yen per gram higher at 2,764 yen. It hit an intraday low of 2,746 yen - its lowest in nearly a week.
US futures rose, with the most active December contract falling $0.9 an ounce to $735.50. On Monday, it hit a 28-year high of $755.70. Spot gold fell sharply on Tuesday after a 17 percent rally from an August low of around $641. It has gained on record high oil, tensions in the Middle East, investor demand through exchange traded funds (ETFs) and a cut in US interest rates.
"It's a consolidation phase at the moment and gold's outlook is stable to down. Probably I wouldn't go long at the moment," said Michael Widmer, director of metals research at Calyon Corporate and Investment Bank. "At least in the very short term, I am not too bullish, but for the end of the year, I still hold my call at $800," he said.
Growth in ETFs continued, with gold used to back New York's StreetTRACKS Gold Shares, the most popular of its kind, staying at a record high of 578.03 tonnes.. Spot platinum rose to $1,356/1,360 an ounce from $1,345.50/1,352.50 late in New York. Earlier this week it reached $1,391, within sight of last November's record high of $1,395 before profit taking kicked in. Spot silver was flat at $13.32/13.37 an ounce, but palladium rose to $351/355 an ounce from $347.50/351.50.