* Gold drops sharply at just above $800/oz as dollar soars
* Oil fall, chart-based weakness also weigh
(Recasts, updates with quote, closing prices, market activity,
adds NEW YORK to dateline)
By Frank Tang and Anna Stablum
NEW YORK/LONDON, Aug 14 (Reuters) - Gold slid nearly 2
percent in volatile trade on Thursday, holding just above $800
an ounce as a combination of the dollar rally, oil losses and
chart-based weakness prompted a bout of long liquidation.
Scott Meyers, senior analyst with Pioneer Futures in New
York, said that gold was weighed upon heavily by movements in
currency and energy markets, and with a steadily strengthening
dollar gold could test support at the $800-an-ounce level.
Gold <XAU=> was at $811.25/812.65 by New York's last quote
at 2:15 p.m. EDT (1815 GMT), down from $825.85/826.85 late in
New York on Wednesday.
The metal hit a session bottom of $804.40 an ounce, near
its eight-month low of $801.90 an ounce hit on Tuesday.
The dollar rose broadly amid signs of higher inflation in
the United States, while reports showed contraction in the euro
zone's economy. [] The euro broke below the $1.48 level.
In addition, lower oil prices reduce gold's appeal as a
hedge against inflation.
"Gold is in a consolidation period," analyst Carsten
Fritsch at Commerzbank said. "Falling oil prices reduce the
inflation risk in the medium term. The earlier rise in oil
prices was just a short-term lift with market sentiment still
bearish on crude."
U.S. crude futures <CLc1>, which had fallen as much as $3
initially, settled down 99 cents at $115.01 a barrel.
Meanwhile, the gold contract for December delivery <GCZ8>
settled down $17.00, or 2 percent, at $814.50 on the COMEX
division of the New York Mercantile Exchange.
Earlier in the session, gold rose to an intraday high of
$836.50, up 1.3 percent as oil prices gained.
U.S. consumer prices rose at twice the rate expected in
July to post the fastest rate of year-over-year growth in
17-1/2 years, pushed up by costlier energy and food, a
government report showed. []
"The figures are bullish for gold prices as higher
inflation supports prices," Commerzbank's Fritsch said.
$900 IN SIGHT?
"This enforces our view that gold can pick up again and it
has the potential to reach $900 in the medium term and $1,000
in the longer term."
Gold hit an all-time high of $1,030.80 an ounce in March,
but has lost ground due to profit-taking, a fall in oil prices,
and a rally in the dollar against a basket of currencies which
has reduced the metal's safe-haven appeal.
The euro zone economy shrank in line with expectations
quarter-on-quarter in the April-June period for the first time
since measurements for the single currency area began in 1995,
the European Union's statistics office said. []
Annual inflation in the euro zone was smaller than earlier
estimated at 4.0 percent, rather than 4.1 percent, the European
Union's statistics office said. []
Silver <XAG=> tracked lower gold prices, ending at
$14.15/14.21 an ounce from $14.82/14.88 late in New York on
Wednesday.
Spot platinum <XPT=> was at $1,481.00/1,501.00, down from
$1,501.50/1,521.50 late in New York on Wednesday. Platinum
dropped to an eight-month low at $1,462 earlier this week.
Spot palladium <XPD=> ended lower at $305.50/313.50 an
ounce from its previous finish of $314.00/322.00 an ounce.
(Additional reporting by Lewa Pardomuan in Singapore; editing
by Jim Marshall)
