LONDON, Nov 27: Gold was softer on Tuesday as investors took profits on the back of a firmer dollar, but analysts said the market remained upbeat and prices would soon test recent highs.

Spot gold was down at $822.60/823.40 a troy ounce by 1045 GMT from $824.70/825.40 late in New York on Monday, when it hit a 2-week high of $836.70, before investors sold to cover losses on stock markets.

Earlier this month the precious metal touched $845.40, the highest since January 1980 as investors piled in seeking refuge from a sliding dollar and financial market turbulence.

There is some small long liquidation, probably because of the stronger dollar and weaker euro, said Frederic Panizzutti, analyst at MKS Finance.

We expect gold to find some support around current levels and to go back up at some stage ... Market sentiment remains positive, but as we move towards the end of the year, liquidity issues could mean more erratic trading.

A rising US currency makes dollar-denominated metals more expensive for holders of other currencies, while gold used as a hedge against inflation often moves in the opposite direction to oil prices.

The dollar took heart on Tuesday from news that Citigroup Inc will sell a stake of itself to the Abu Dhabi government and it rose against the euro, the yen and the Swiss franc.

Crude oil fell below $97 a barrel on Tuesday as investors bet that the Opec exporter group will boost supply for a second time this year at a meeting next week to cool near-record prices.

Prices hit a record high of $99.29 a barrel last week.

Crude oil, as the second major fundamental driver of gold prices, might also be a mixed bag for the price movement of precious metals today, Dresdner said in a note.

In Asia the key October 2008 contract on the Tokyo Commodity Exchange hit an intraday low of 2,871 yen per gram before ending at 2,913 yen on bargain hunting, up 7 yen from Monday’s close.

Platinum hit a high of $1,475 an ounce before falling to $1,464/1,469, from $1,467/1,472 on Monday.

Traders think prices will be firmly underpinned by falling supplies from South Africa, the world’s biggest producer.

Palladium firmed to $355.00/358.00 an ounce from $353/358 on Monday and silver slid to $14.64/14.69 from $14.77/14.82.—Reuters