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NY platinum hits 12-week low, gold ekes out gain

NEW YORK, April 26 (Reuters) - New York platinum dropped another 3.4 percent on Monday, plumbing a 12-week low as commodity funds continued to lighten holdings despite strong industrial demand.

Platinum's plunge eclipsed gold and silver, which managed further recoveries from last week's respective seven and 11-week lows with help from a bounce in the euro from a five-month low against the dollar overnight.

NYMEX July platinum ended down $28.60 at $813.90 an ounce, trading at its lowest since Feb. 5. Spot platinum was last quoted at $820/825.

"It's just long liquidation. It really all started with Greenspan's 'no more deflation' type statements last week," said a dealer at a platinum and palladium refining company, referring to Federal Reserve Chairman Alan Greenspan. "That started hitting the silver and the white (metals) in general."

Dealers said the outlook for platinum, which hit 24-year highs earlier this month, remained rosy given the strong economy. Most platinum is used in jewelry and automobile catalytic converters.

"Platinum is a bit overdone at this point," said a trader at another refining company. "Everybody expected a bit of a correction. But $120 in a week's time is pretty extreme for a metal that is fundamentally sound."

June palladium fell $7.70 to $273.15 an ounce. Spot closed at $270/275.

COMEX June gold rose 90 cents to $396.60 an ounce, trading from $394.30 to $398.80. Heavy fund selling knocked gold to $390.20 last Wednesday to its lowest since March 3.

The euro fell to $1.1764 overnight before traders started selling the dollar again and moving some money back into gold.

"On the gold front, there is still a lot of a link to the U.S. FX marketplace," said Paul McLeod, vice president of precious metals at Commerzbank Securities. "In the long term, I expect the U.S. dollar to weaken again but in the short term I think its going to continue to flex its muscles and that will put the gold price under a little bit of pressure."

Last week's fall was met with buying by physical bullion merchants. Moreover, the liquidation of speculative long positions made traders more comfortable getting back in.

The CFTC reported late Friday that the net noncommercial long position shriveled to 73,276 contracts from 138,696 contracts in the week to last Tuesday.

"The large speculators were massive sellers as the commercials were equally massive buyers," wrote Leonard Kaplan, president of Prospector Asset Management in a client note. "The statistics ... clearly demonstrate that the physical market has reawakened, and with a vengeance."

Consumers in India, the Middle East and Asia are very sensitive to prices. Physical buying dried up when gold prices were advancing to the 15-year high set on April 1 at $433.00.

Spot gold rose to $395.55/6.05 from Friday's close at $394.85/5.35. London's afternoon fix Monday was at $397.00.

May silver went up 1.0 cent to $6.173 an ounce, in a $6.245 to $6.15 range. Silver was consolidating after skidding 29 percent from a 16-year high of $8.50 early this month to $6.00 on Thursday. Spot closed at $6.15/18, unchanged from late Friday. The fix was at $6.225.