* Asia shares fall sharply, global indexes drop
* Dollar gains vs euro
* Palladium plunges to 5-1/2 year low (Updates prices; adds comment, second byline, NEW YORK dateline)
By Marcy Nicholson and Clara Denina
NEW YORK/LONDON, Jan 11 (Reuters) - Gold retreated on Monday as the dollar rose versus the euro, but the metal held around a nine-week high as pressure on stock markets continued to support investors' flight to safety.
Asian shares sank to their lowest in more than four years on Monday after the People's Bank of China guided the yuan's midpoint rate sharply stronger. Global stock indexes and oil prices also dropped, continuing a brutal start to 2016. MKTS/GLOB
"Some investors were anticipating that gold futures were slightly overbought after the run-up last week," said Phillip Streible, senior commodities broker for RJO Futures in Chicago.
"Traders booked profits on that run-up to $1,100, possibly to free up margins to support other positions that have recently been beat up but still have long-term prospects."
Spot gold XAU= was down 0.7 percent at $1,095.76 an ounce at 3:03 p.m. EST (2003 GMT), while U.S. gold futures for February delivery GCcv1 settled down 0.2 percent at $1,096.20.
"There is a bit of short rally now, it seems that gold has encountered resistance at the 100-day moving average, which comes in at $1,109," Mitsubishi Corp strategist Jonathan Butler said.
"We see things being tough in the first half and that's related to a probable increase in rates again towards June, the dollar could have a little more strength from here, especially if Europe or Japan extend quantitative easing."
Bullion is often seen as an alternative investment during times of financial uncertainty, although safe-haven rallies tend to be short-lived.
Perceived missteps by China's authorities in controlling their share market and currency have led to concerns Beijing might lose its grip on economic policy. is the world's biggest consumer of gold at around 1,000 tonnes a year.
Gold slid 10 percent last year on fears higher U.S. rates would lower demand for the non-interest-paying asset, while boosting the dollar. The Fed eventually raised rates in December and attention has shifted to how many hikes will follow in 2016.
"An accelerated pace of tightening is going to be bearish for the gold market," Societe Generale (PA:SOGN) analyst Robin Bhar said.
On Monday, Atlanta Federal Reserve Bank President Dennis Lockhart said there may not be enough fresh data on inflation to support another U.S. interest rate hike by March. holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares (N:GLD), rose 0.69 percent on Friday, data from the fund showed.
Palladium XPD= fell to its lowest since August 2010 at $477.22 an ounce, while platinum XPT= was down 4.2 percent at $838.71 an ounce. Silver XAG= dropped 0.5 percent at $13.86 an ounce.