* Asia shares fall sharply, global indexes drop
* Dollar gains vs euro
* Palladium plunges to 5-1/2 year low
(Updates prices; adds comment, second byline, NEW YORK
dateline)
By Marcy Nicholson and Clara Denina
NEW YORK/LONDON, Jan 11 (Reuters) - Gold retreated on Monday
as the dollar rose versus the euro, but the metal held around a
nine-week high as pressure on stock markets continued to support
investors' flight to safety.
Asian shares sank to their lowest in more than four years on
Monday after the People's Bank of China guided the yuan's
midpoint rate sharply stronger. Global stock indexes and oil
prices also dropped, continuing a brutal start to
2016. MKTS/GLOB
"Some investors were anticipating that gold futures were
slightly overbought after the run-up last week," said Phillip
Streible, senior commodities broker for RJO Futures in Chicago.
"Traders booked profits on that run-up to $1,100, possibly
to free up margins to support other positions that have recently
been beat up but still have long-term prospects."
Spot gold XAU= was down 0.7 percent at $1,095.76 an ounce
at 3:03 p.m. EST (2003 GMT), while U.S. gold futures for
February delivery GCcv1 settled down 0.2 percent at $1,096.20.
"There is a bit of short rally now, it seems that gold has
encountered resistance at the 100-day moving average, which
comes in at $1,109," Mitsubishi Corp strategist Jonathan Butler
said.
"We see things being tough in the first half and that's
related to a probable increase in rates again towards June, the
dollar could have a little more strength from here, especially
if Europe or Japan extend quantitative easing."
Bullion is often seen as an alternative investment during
times of financial uncertainty, although safe-haven rallies tend
to be short-lived.
Perceived missteps by China's authorities in controlling
their share market and currency have led to concerns Beijing
might lose its grip on economic policy.
China is the world's biggest consumer of gold at around
1,000 tonnes a year.
Gold slid 10 percent last year on fears higher U.S. rates
would lower demand for the non-interest-paying asset, while
boosting the dollar. The Fed eventually raised rates in December
and attention has shifted to how many hikes will follow in 2016.
"An accelerated pace of tightening is going to be bearish
for the gold market," Societe Generale (PA:SOGN) analyst Robin Bhar said.
On Monday, Atlanta Federal Reserve Bank President Dennis
Lockhart said there may not be enough fresh data on inflation to
support another U.S. interest rate hike by March.
Meanwhile, holdings of the world's largest gold-backed
exchange-traded fund, New York-listed SPDR Gold Shares (N:GLD), rose
0.69 percent on Friday, data from the fund showed.
Palladium XPD= fell to its lowest since August 2010 at
$477.22 an ounce, while platinum XPT= was down 4.2 percent at
$838.71 an ounce. Silver XAG= dropped 0.5 percent at $13.86 an
ounce.