* Rising dollar, falling oil prices weigh on gold
* Platinum group metals weighed by poor economic data
(Updates throughout, adds comment)
By Jan Harvey
LONDON, Dec 9 (Reuters) - Gold prices slipped 1 percent on
Tuesday, failing to hold earlier gains, as the stronger dollar
versus the euro weighed on prices.
The precious metal ticked higher in earlier trade as a
healthier tone to the equity markets boosted prices. However,
dollar strength pushed it back into negative territory.
Spot gold <XAU=> was quoted at $767.50/769.50 an ounce at
1426 GMT, off a low of $761.80 but down from $771.30 late in New
York on Monday. Earlier it touched a session high of $776.45.
U.S. gold futures for February delivery <GCG9> slipped 90
cents or 0.12 percent to $768.40 an ounce.
"The euro came off a bit (versus the dollar) and gold is
following suit," said Afshin Nabavi, head of trading at MKS
Finance in Geneva.
"It is a very quiet week, with most of the Middle East
closed throughout the week and a lot of the Far Eastern
countries also on holiday," he added. "There has been very low
volume in the last couple of days."
The dollar gained against the euro as risk appetite waned,
with investors focusing their attention on the dire outlook for
the global economy. []
The precious metal is often bought as an alternative
investment to the U.S. currency and moves in the opposite
direction to it.
The euro suffered as the main reading of the German ZEW
economic sentiment index for December came in better than
expected, but the current conditions component showed a larger
than expected deterioration in the euro zone's biggest economy.
[]
The other main external driver of gold, the price of oil,
also slipped on Tuesday at just over $43 a barrel.
The market is awaiting a demand report from the U.S. energy
department later in the session and the production meeting next
week of the Organization of the Petroleum Exporting Countries
(OPEC) for signs of the next direction of trade. []
Falling crude prices can undermine confidence in commodities
as an asset class, and dent interest in gold as a hedge against
oil-led inflation.
However firmer stock markets are providing some support for
prices. The pan-European FTSEurofirst 300 <> index rose
1.2 percent, reversing earlier losses. []
The European Central Bank said gold and gold receivables
held by euro zone central banks fell by 42 million euros in the
week ending December 5. []
PLATINUM WILTS
Among the other precious metals, platinum slipped a touch as
investors worried slowing economic activity would hit demand for
the metal, which is chiefly used to make catalytic converters.
Economic news was weak on Tuesday. Data showed Japan's
economy contracted at a faster pace than anticipated in the
third quarter, while British industrial output fell at its
sharpest pace in nearly six years in October. []
A survey from the Organisation for Economic Coperationa and
Development (OECD) also said the U.S. economy will probably get
worse before it gets better. []
News on Monday of developments in U.S. government plans to
bail out ailing carmakers boosted the precious metal that
session, but the fillip was short-lived.
"We would still exercise caution in the current environment,
particularly since there is a risk that the package would be
viewed as simply a short-term solution that does not resolve the
underlying problem," said Barclays Capital analysts in a note.
Spot platinum <XPT=> eased to $800/820 an ounce from $821
late in New York on Monday, while palladium <XPD=> was steady at
$173/178 an ounce from $173.
Spot silver <XAG=> was quoted at $9.76/9.84 an ounce against
$9.95.
(Editing by William Hardy)
