Gold retreats in London

Gold retreated from highs on Monday as the dollar recovered from lows against the euro, with fears over physical demand weighing on sentiment. Spot gold climbed to $725.35/727.35 an ounce at 1409 GMT from $723.05 late in New York on Friday.
"This is due to a combination of the usual daily gold drivers - crude oil and the euro-dollar exchange rate - and also the weakness of physical gold demand in India," said Dresdner Kleinwort consultant Peter Fertig. The dollar was pressured in early trade by a return in risk appetite, after recording its biggest monthly gain in more than 17 years in October.
However, it lifted from lows against the euro in early afternoon on Monday in Europe. Traders will be keeping a close eye on a raft of interest rate decisions due later in the week for clues to the next direction of the gold market. The European Central Bank is due to announce its decision on eurozone interest rates - expected to be a 50 basis point cut - on Thursday, while the Bank of England and the Reserve Bank of Australia are also expected to announce cuts this week.
Traders will also be watching gold's other main external driver, the crude oil market. Prices were softer on Monday, with US crude futures dipping nearly $2 a barrel as investors focused on slowing energy demand. Weaker crude prices tend to pressure gold, which benefits from interest in the metal as a hedge against inflation.
Physical demand for the metal also remains muted as price volatility spooks investors. Gold imports to India, the world's biggest bullion market, fell 27 percent in October year on year, the Bombay Bullion Association said. Gold imports to Turkey, a key Middle Eastern market, also tumbled to just 1 tonne from 29.7 tonnes in September, as the firmer dollar curbed buying.
"Our (forex) team believes that an Obama victory is likely to be short-term US dollar positive, as it would allow Washington to respond more proactively on crisis management," said Barclays Capital in a research note. The platinum group metals were little changed as the market awaited US auto sales figures later in the session.
The numbers are expected to fall to the lowest levels of the year in October and possibly their weakest in two decades, as consumer confidence continues to languish. Soft car sales data from Europe are already pressuring PGMs. Spain's car sales in the same month tumbled 40 percent, the Spanish car manufacturers' association said.
Spot platinum edged down to $806.50/836.50 an ounce from $813 an ounce late in New York on Friday, while spot palladium was unchanged at $193.50/205.50. "Without any clear direction from producers on supply management and demand from the automotive sector falling away, the surplus accumulation in the market will weigh on prices," said JP Morgan analyst Michael Jansen in a research note. Among other precious metals, spot silver was at $9.73/9.83 against $9.81 an ounce.