LONDON, Nov 5: Gold eased in Europe on Wednesday as the dollar recovered some lost ground against the euro after Democrat Barack Obama won the US election and with hopes the change in the presidency would be positive for the economy.

However, strong physical demand for gold and a better appetite for the precious metal after holding at the $700 an ounce support level is likely to underpin prices, traders said.

Spot gold was quoted at $753.00/755.00 an ounce down from $763.20 late in New York on Tuesday.

Afshin Nabavi, head of trading at MKS Finance, said that with physical demand for gold as strong as it is, bullion prices were unlikely to test new lows.

The European Central Bank is expected to cut interest rates by 50 basis points at a meeting on Thursday.

That should be negative for the euro and for gold, but because (that expectation) has been in the market for a while now, we may not see a reaction unless the cut is bigger or smaller than expected, said MKS’ Nabavi.

Gold’s other main external driver, crude oil, was also weaker, slipping more than $3 a barrel to below $68 as the firmer dollar sparked profit-taking after the previous session’s more than 10 per cent surge.

Oil traders will be watching for US inventory data due out later in the session for clues as to the next move for crude futures.

Among the other precious metals, platinum edged up to $847/867 an ounce from $841.50. Anglo Platinum, the world’s biggest producer of the white metal, said it had shut down its Polokwane smelter in South Africa, and was investigating reports of a fire at the facility.

Sister metal palladium was at $209/219 an ounce, up from $206.50 an ounce. Rhodium slid to a near four-year low on fears over falling demand from carmakers.

The metal, which like platinum and palladium is chiefly used as a component in autocatalysts, has been pressured sharply lower by fears slowing economic activity will cut consumption.

Palladium, being the biggest underperformer over the last two years, has been relatively stable over the last couple of months, Commerzbank trader Rory McVeigh said.

But with this low price, physical consumers are looking at the market and buying some now for 2009. Silver was little changed at $10.18/10.28 an ounce, against $10.19 in late New York trade on Tuesday.—Reuters