NEW YORK, Jan 21 (Reuters) - COMEX gold futures retreated on Tuesday morning as the shaky U.S. dollar rebounded, but war fears and lofty world oil prices propped-up the safe-haven precious metal, trading sources said.
February gold on the New York Mercantile Exchange's COMEX division slipped $3.00 to $353.80 an ounce at 10:01 a.m. EST (1501 GMT), at the low end of a range of $357.40 to $353.40.
Long liquidation took gold prices off last Thurday's six-year high at $359 as New York reopened after a three-day weekend when the COMEX was shut Monday for Martin Luther King Jr's birthday.
"You're seeing some selling in gold off the stronger dollar," said AG Edwards commodity commentator James Quinn. "There was a slight reduction in the gold net-long position, but it is still absolutely overbought and the market's looking to correct a little bit."
Friday's CFTC Commitments of Traders data showed large speculators pared their net long position to 60,662 contracts as of Jan. 14, before Thursday's spike, from 63,563 a week earlier. These rank among the largest bullish bets on record.
February futures reached its highest value since February 1997 last week after U.N. weapons inspectors in Iraq said they had found a cache of empty chemical warheads.
Analysts have said gold is ripe for profit taking after a 28 percent year-on-year price rise, with stimuli in other financial markets possibly sparking the correction.
"A turn in the dollar, the stock market or the oil market could be the event, or it could be a comment by President Bush or any number of other causes," said IFR Pegasus analyst Tim Evans.
Spot gold eased to $354.00/75 an ounce, compared with Monday's close in London at $356.00/6.50 and Tuesday's London morning at $355.55.
The dollar rebounded from recent lows against key currencies on Tuesday, which made gold less affordable to overseas buyers.
But inflation fears held gold up as oil prices raced to a two-year high at $34.50 a barrel as the United States urged the U.N. Security Council not to shirk difficult choices on Iraq and a military buildup in the Gulf fueled speculation that war is looming.
Meanwhile, analysts said in a Reuters poll on Tuesday that the average gold price is seen rising 10.5 percent in 2003 due to further weakness in an ailing dollar and the metal's reputation as a safe-haven asset.
A global survey of 21 analysts showed spot gold would average $342.50 a troy ounce this year, then drop back slightly to $340 in 2004, still up 9.7 percent on 2002 prices.
A similar Reuters poll in July 2002 showed an average gold price forecast of $320 an ounce. Gold averaged $310 in 2002.
In other precious metals, March silver fell 4.0 cents to $4.77 an ounce, at the low end of a $4.82-$4.76 trading range. Spot silver fetched $4.75/77, versus its last close at $4.79/81. Tuesday's fix was $4.76.
NYMEX April platinum rose $4 to $623 an ounce. Spot platinum was at $629.00/634.00.
March palladium climbed $6 to $264. Spot traded at $260.00/268.00 an ounce.