* Gold steadies in line with oil
* Firmer tone to dollar damps bargain hunting after 2-wk low
* Platinum continues descent as demand fears prompt selling
(Recasts, adds comment, updates prices)
By Jan Harvey and Raissa Kasolowsky
LONDON, July 24 (Reuters) - Gold steadied in line with oil
on Thursday as an overall firmer dollar dampened the bargain
hunting that had supported the metal after its earlier two-week
low.
Gold <XAU=> was little changed at $922.80/923.80 an ounce at
1351 GMT from $921.35/922.95 late in New York on Wednesday.
Earlier in the session the precious metal hit an intraday low of
$916.40 -- its weakest since July 9.
"Gold remains on the defensive following the shift in
sentiment after the start of this week," said Jon Nadler, senior
analyst at Kitco Bullion Dealers in Montreal.
"The $915 area remains a support zone that must hold lest
the metal next tries to find buyers under $900 per ounce."
The euro <EUR=> fell to a two-week low against the dollar
after a slew of weak European economic data highlighted slowing
growth and cooled expectations of more interest rate rises.
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A stronger greenback usually pressures gold, which is often
bought as an alternative investment to the U.S. currency.
Oil meanwhile steadied after slipping to a seven-week low
earlier in the session. Gold typically moves in line with crude,
as it is often bought as a hedge against oil-led inflation.
[]
"Clearly, final demand for crude oil products is falling
because of high prices," said Walter de Wet, an analyst at
Standard Bank. "Therefore, precious metals can expect little
support from the crude front."
Investment interest in the precious metal remains relatively
soft compared with recent months. Gold holdings of the SPDR Gold
Trust, the world's largest exchange-traded fund backed by
physical bullion, slipped 2.5 percent yesterday, the fund said.
Its holdings have fallen nearly 5 percent in the last two
days to 673.40 tonnes, against more than 700 tonnes at the
beginning of the week. []
Analysts remain bullish on prices for the remainder of the
year, however, with a poll of 40 analysts and traders conducted
by Reuters showing on Thursday a mid-range forecast of $930.00
an ounce, 30 percent above last year's average price.
[]
PLATINUM
Platinum and palladium also remain under pressure amid fears
over demand from car manufacturers, with both metals near
six-month lows.
Platinum prices in particular have slipped sharply over the
last 10 days. The metal is currently trading nearly 25 percent
below its March record high of $2,290 an ounce.
Both platinum and palladium are widely used in car
manufacturing as a component in catalytic converters.
As well as the weaker demand outlook, the metals are also
reacting to easing fears over supply from South Africa, which
produces four out of every five ounces of the world's platinum.
With the power situation in the republic, which earlier this
year took prices to record highs, now looking more stable,
analysts see further downside to the metal.
"We still see all of the platinum group metals as vulnerable
to further liquidation by physical holders of the metal, the ETF
players in particular," said JP Morgan analyst Michael Jansen.
Spot platinum <XPT=> touched a session low of $1,702.00 an
ounce, its weakest level since January 31, before recovering
slightly to trade at $1,714.50/1,734.50 against
$1,744.00/1,764.00 an ounce in New York.
Spot palladium <XPD=>was unchanged at $383.00/391.00 late in
New York, having earlier touched an intraday low of $371.50, its
weakest since January 25.
Among other precious metals, spot silver traded slightly
higher at $17.39/17.45 an ounce, against $17.33/17.38 late in
New York on Wednesday.
(Reporting by Jan Harvey and Raissa Kasolowsky; Editing by
Michael Roddy)
