Gold fell in Europe on Wednesday, consolidating a recent run to 28-year peaks as the dollar rebounded slightly from record lows versus the euro and took some shine off bullion's appeal for non-U.S. investors.
Platinum set a fresh peak for the year at $1,348.00 per ounce, fuelled by investor buying, having shaken off speculation that a strike at General Motors Corp would reduce demand.
Analysts said bullion was still well positioned to attract additional investors as credit market concerns haunted markets, highlighting gold's safe-haven appeal.
There have been several calls for higher levels and all the factors are in place for a sustained short-term bull-trend, said MKS Finance analyst Frederic Panizzutti.
Spot gold rose to $736.70 an ounce, near a 28-year high of $739, before dropping back to $727.10/727.60 by 1540 GMT, down from $730.40/731.20 late in New York on Tuesday.
The dollar rallied from its record trough versus the single European currency, brushing aside a steeper-than-expected fall in U.S. August durable goods data as buyers took advantage of cheap exchange rates.
In other bullion markets, Japanese gold futures rebounded.
Benchmark August 2008 gold futures on the Tokyo Commodity Exchange ended up 23 yen or 0.9 percent at 2,731 yen a gram, having fallen to a one-week low of 2,706 yen on Tuesday.
The most-active December gold contract on the COMEX division of the New York Mercantile Exchange was down $4.80 at $734.20 an ounce in electronic trade.
PLATINUM SCORES HIGH
Platinum stood at $1,345/1,349 an ounce, against $1,343.90/1,350.90 late in New York on Tuesday, having hit a peak of $1,348.00 -- last seen in November 2006 -- boosted by investor demand and tighter interest rates charged for borrowing the precious metal.
The borrowing rates in platinum have tightened, which explains some of the move today. We've been hearing that miners have not had a great year due to supply disruptions and that could lead to a deficit rate in the market, a metals trader in London said.
Traders said one-month leasing rates had firmed to 2.429 percent by Wednesday from around 1.649 a week earlier.
On Tuesday, UBS raised its short-term forecasts on platinum, used in jewellery and auto catalyst production, noting that Chinese demand for platinum has been very strong amid firm jewellery demand.
In the medium term, we expect the current uptrend for gold to continue, although a small correction is likely near term, based on the high optimism prevailing on the market, Commerzbank said in a daily research report.
On mining, Global mining giant BHP Billiton Ltd/Plc on Wednesday upgraded the size of its total ore resource at the giant Australian Olympic Dam uranium, copper and gold mine by 75 percent to 7.7 billion tonnes.
Barrick Gold Corp, the world's top gold producer, said on Wednesday its 2007 cash costs would be at the high end of forecasts but that higher gold costs had expanded margins.
In other metals, silver rose to $13.53/13.58 an ounce from $13.42/13.47 in New York. Palladium rose to $337.00/340.00 an ounce from $335.05/339.05 on Tuesday.
(Additional reporting by Atul Prakash in London and Chikafumi Hodo in Tokyo)