Gold advanced on Monday to trade just below a recent historic high on investor buying, but pared gains later as the dollar rose against the euro, traders said.

Silver eased after hitting a 27-year high above $18, while platinum slipped after moving towards its record high. Palladium rose more than 2 percent and traded above $500 an ounce.

Gold rose as high as $951.90 before falling to $947.15/947.85 an ounce at 6:09 a.m. EST, against $943.70/944.50 in New York late on Friday and a recent record high of $953.60.

There are still some orders in the market and we are very close to the highs, so I think funds and speculators would try to push gold to new highs. Technically, also, it looks good, said Michael Kempinski, senior metals trader at Commerzbank.

It looks that the first attempt failed as gold traded up to $952 very quickly, but came off. The main focus is on the dollar at the moment and we are likely to see some profit taking.

The dollar rose versus the euro and high-yielding currencies were well-bid as stronger equity markets, on positive news about the U.S. financial sector, boosted investor confidence.

A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

Oil rose above $99 a barrel, supported by Turkey's incursion into north Iraq and fresh flows of speculative money ahead of OPEC's meeting in early March.

Gold might advance further today, being supported by all the major fundamental drivers, Dresdner Kleinwort said.

The U.S. existing home sales are expected to continue the decline, which could fuel speculation on a Fed rate cut at the March FOMC meeting. This would be a short-term supporting factor for the euro against the US dollar, the investment bank said.

The existing home sales data for January is due at 10:00 a.m. EST.

PLATINUM STEADIES

Platinum steadied after rising towards last week's record high of $2,192 an ounce. The metal was last quoted at New York's $2,148/2,152 late on Friday.

We continue to believe that platinum will trend higher over the medium term as investors seek safe havens, a hedge against inflation and protection against a weaker dollar, Dan Smith, analyst at Standard Chartered Bank, said in a report.

However, platinum's fundamentals, and in particular developments in South Africa, are likely to be far more important drivers over the next few months.

Platinum might average $2,300 an ounce in the second quarter as underlying structural problems were likely to persist for the time being, he said.

In January, the world's biggest platinum and major gold mines were forced to halt for five days as South African power utility Eskom restricted firms to 90 percent of normal supply, leading metal producers to forecast declines in output.

Platinum and palladium have been the world's best performing commodities in terms of spot price performance so far this year. This reflects the ongoing power shortages in South Africa, said Michael Lewis, head of commodities research at Deutsche Bank.

Platinum and palladium prices have jumped more than 40 percent this year.

In industry news, South Africa's Gold Fields forecast that gold production for the third quarter would fall between 20 and 25 percent compared with the December quarter due to the electricity crisis in the country.

Harmony said it saw output in its current third quarter to remain flat at 12.4 tonnes of gold, saying one of its mines would compensate for the impact of the power crisis.

Silver rose as high as $18.15 an ounce before falling to $18.06/18.11, versus $17.98/18.03 in New York. Palladium was at $510/515, up from $498/503 an ounce.

(Reporting by Atul Prakash; editing by Michael Roddy)

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