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NY gold sags early as U.S. data absorbed

NEW YORK, Dec 16 (Reuters) - COMEX gold futures sagged Tuesday morning as the U.S. dollar held above a record low against the euro and the market digested a batch of U.S. economic data that buoyed the currency, dealers said.

Benchmark February gold at 11:00 a.m. EST (1600 GMT) was off $1.00 at $408.90 an ounce, keeping to a tight range of $411.40 to $408.40 that was within reach of last Wednesday's nearly 8-year high at $413.30.

"Gold is shading the dollar movements -- that's really the main driver," said Jim Pogoda, vice president of precious metals at Mitsubishi International Corp. "There are some cross currents. We've had some very dollar-positive reports and the dollar is not responding, but it's still early."

Consumer prices took an unexpected tumble last month, pulling the underlying rate of inflation down to a nearly 38-year low. Separate data showed groundbreaking for new homes surged in November, while the shortfall in the U.S. current account, the broadest measure of America's trade with the rest of the world, shrank in the third quarter.

Economists said the absence of upward price pressures meant the Federal Reserve could hold interest rates at 1958 lows for a long stretch.

The euro hit a record high of $1.2361 as the dollar's euphoria over the weekend capture of former Iraqi leader Saddam Hussein gave way to worries about a widening U.S. account deficit. The euro was at $1.2326.

A weak U.S. dollar typically encourages buying in dollar-denominated gold as the precious metal's price becomes cheaper in other currencies.

"Gold is a very resilient market right now. The dollar's low is not that far away from the low it hit yesterday, so it is just trading in a range," a New York gold trader said.

Dealers peg first chart resistance in COMEX February gold at $410 and $413.30, with support at $401 and then the psychological level of $400.

Bullion is hovering just below its highest since early February 1996 when it peaked that year at $417.70. A breach of that high would take gold back to its strongest in just under 13 years.

Spot gold fetched $407.80/8.55, below Monday's last quote in New York at $408.75/9.50. London bullion dealers fixed the afternoon reference price at $408.00.

COMEX March silver was 3.8 cents higher at $5.695 an ounce, trading from $5.64 to $5.71, touching its priciest levels since September 1999. Spot silver was at $5.65/67 against $5.62/64 on Monday. The fix was at $5.66.

January platinum was $1.30 cents firmer at $824 an ounce, shy of its early peak of $826.50, its highest price since March 1980 when platinum reached an all-time high at $1,045. Spot platinum fetched $824.00/828.00.

March palladium fell $3.00 to $205 an ounce. Spot traded at $199.00/204.00.