PRECIOUS-Gold set for third day of losses as dollar firms

(Updates throughout)

* Dollar strength dents gold * ETPs hit new record high * S. Africa platinum mines still closed, platinum edges up By Clare Hutchison

LONDON, Oct 9 (Reuters) - Gold was on course to book a thirdsuccessive day of losses on Tuesday, as concerns over the eurozone's peripheral economies sent the euro lower and strengthenedthe dollar.

The single European currency slipped after a meeting of eurozone finance ministers on Monday dashed investors' hopes of abailout for Spain's troubled economy, with ministers insistingthat Madrid was still able to fund itself via capital markets.

News that Greece's international lenders may be give Athenslonger to meet its deficit reduction targets also weighed on theeuro , which in turn helped lift the dollar indexfrom a two-week low.

A stronger dollar usually makes gold less affordable fornon-U.S. investors and tends to push the price lower.

Spot gold fell 0.2 percent to $1,771.09 an ounce at1045 GMT, bringing the fall over the last three trading days tonearly 1 percent, although the price was still close to itshighest in 11 months.

However, analysts said the price move was little more than amodest correction and recent moves by central banks to loosenmonetary policy, including the Federal Reserve's open-endedbond-buying plan announced last month, supported gold in thelong term.

"The return of dollar strength has stalled the move in gold,but it's very temporary, we're still on track to see moregains," said Deutsche Bank's Michael Lewis.

"The danger with Greece and Spain is that it does have atendency to increase the buying of U.S. treasuries, which isdollar supportive. But our sense is that the real driver for thedollar will be real interest rates and real interest rates inthe U.S. are negative."

Gold usually benefits from an environment of low realinterest rates, those that strip out the effect of inflation, asit lowers the premium that investors would otherwise forfeit ifthey held bullion rather than a yield- or dividend-bearing assetsuch as company shares or currencies.

The gold price has risen more than 13 percent so far thisyear, in large part because of the efforts of the world's majorcentral banks to keep monetary policy loose.


The central bank in China, the world's second largest goldbuyer, on Tuesday made its second largest gross cash injectioninto domestic money markets on record, with a boost of 265billion yuan ($42.15 billion).

Meanwhile, the International Monetary Fund cut its 2012global growth forecast to 3.3 percent from 3.5 percent andwarned U.S. and European policymakers that failure to solvetheir respective economic problems would only make the slumpworse.

Reflecting continued investor demand for gold against aworsening economic backdrop was another inflow of metal intoexchange-traded products (ETPs), which brought global holdingsto a fresh record of 74.76 million ounces by Monday's close.

Consumers have been more reticent to step into the marketand buy gold with the price close to its highest since Novemberlast year.

"The jewellery sector has been badly affected, as people arereluctant to spend," said a Singapore-based trader. "The lack ofphysical demand is worrying."

In other precious metals, silver fell 0.2 percent to$33.88 an ounce to hover around its lowest in two weeks.

Platinum edged higher, rising 0.2 percent on the dayto $1,689.75 an ounce.

There was no sign that the unrest that has swept throughSouth Africa's platinum belt was easing. Nearly 100,000 workersare on strike in the country and 75,000 of those work in themining industry.

Several operations belonging to world number one producerAnglo American Platinum remain shuttered, along withfacilities belonging to other smaller miners.

(Additional reporting by Rujun Shen in Singapore; editing byKeiron Henderson)

((clare.hutchison@thomsonreuters.com +44)(0)(20 7 542 3346))