Gold steadies as equities bounce, dollar caps gains

By Lewa Pardomuan

SINGAPORE (Reuters) - Gold steadied above $730 an ounce Tuesday after equities reversed losses but a rallying dollar was likely to curb gains, with traders looking next to an expected U.S. interest rate cut and economic data for direction.

Platinum also bounced but held near five-year lows on worries about falling demand for autocatalysts after automakers cut output. Honda Motor Co, Japan's second-largest carmaker, said on Tuesday it would cut output of its Civic compact in the U.K. from December to meet falling demand in Europe.

Gold was trading at $733.40, up $3.80 from New York's notional close on Monday. It hit an intraday high of $735.20 before slipping to hit a low of $723.70 after falling equity markets forced investors to sell gold to cover margin calls.

"I am a bit neutral with a slight downward bias on gold. The dollar is still on a strong rally while euro and the pound are still on a downward slide," said Adrian Koh, analyst at Phillip Futures in Singapore.

"I guess this week, the focus will also be on the Fed meeting," said Koh, who expected gold to trade in a range of between $700 and $750 an ounce.

Gold fell to a session low of $706.10 on Monday on heavy fund selling, not far from the 13-month low of $680.80 it touched last Friday.

It has fallen as much as 27 percent since touching a two-month high of $931 on Oct. 10 after losses in equity markets forced investors to cash in, with falling oil prices and a surging dollar adding to the selling pressure, overshadowing its

potential appeal as a safe haven in the financial storm.