* Gold caught in commods selling as caution batters markets
* Dollar extends gains vs euro as EZ debt concerns mount
* Platinum, silver, palladium all slide in gold's wake
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Nov 12 (Reuters) - Gold prices slipped more than 2
percent in Europe on Friday as concerns over the ability of some
smaller euro zone countries to service their debt battered the
financial markets, sparking broad-based selling of commodities.
Worries that Ireland would, like Greece, need a bailout
knocked the euro sharply lower against the dollar, while talk of
a possible Chinese rate hike depressed commodities, pushing this
week's Group of 20 meeting in Seoul into the background.
Spot gold <XAU=> fell to a session low of $1,378 and was bid
at $1,384,45 an ounce at 0950 GMT, against $1,409.39 late in New
York on Thursday. U.S. gold futures for December delivery <GCZ0>
fell $19.50 an ounce to $1,383.80.
The precious metal retreated swiftly from the record
$1,424.10 an ounce it hit on Tuesday as the dollar's rebound
prompted selling of gold.
However, in the longer term the metal, which unlike other
commodities is widely seen as an alternative currency and a safe
store of value, could be supported by concerns over financial
market volatility, analysts said.
"This is a knee-jerk risk sell-off, and gold is getting
dragged down with the rest of the complex," said RBS Global
Banking & Markets analyst Daniel Major.
But he said support remained for the precious metal which
could override this effect. "We have seen fluctuations in the
correlation between gold and the dollar this week. Gold was
still pushing forwards regardless of the stronger dollar."
"In the near term... I think there is a sufficient amount of
peripheral European concern that would bring out some of the
safe-haven status of gold," he added.
The euro hit six-week lows on the dollar on Friday, dipping
below $1.3600 as renewed concerns about Ireland's ability to pay
its debt kept up selling pressure. []
YIELDS WIDEN
The prospect of a bailout for Ireland significantly widened
the difference in bond yields of high-risk European countries
over those of Germany, and overshadowed a Group of 20 leaders'
summit in Seoul. []
"As European sovereign debt falls under the spotlight again,
gold could benefit next week on an increase in wealth protection
demand," said Fairfax analyst Marc Elliott in a note.
G20 leaders drew a veil over their economic policy disputes
on Friday, agreeing to tackle tensions that have raised the
spectre of currency wars and giving the nod to countries that
have seen huge capital inflows to impose controls.
[]
Meanwhile major European stock markets opened lower after a
weak session in Asia which notably saw the Shanghai composite
index <> fall 5 percent, its biggest one-day drop since
May, on talk of another Chinese interest rate hike. []
Gold priced in euros, sterling and Swiss francs also fell,
while the precious metal headed for its biggest daily loss since
July 1 in Japanese yen terms, down 3 percent at its session low.
On the physical side of the market, Indian gold traders
hunted for bargains after prices retreated from record highs,
stocking up for weddings in the world's biggest bullion
consumer. []
Interest in investment vehicles like exchange-traded funds
was soft, however, with holdings of the world's largest
gold-backed ETF, New York's SPDR Gold Trust <GLD>, falling by
just under 1 tonne on Thursday. []
Oil meanwhile tumbled 2.4 percent and base metals fell as
commodities came under pressure from the stronger dollar and
speculation that China could be headed for another rate hike.
Other precious metals slipped sharply as commodities sold
off, with palladium down more than 4 percent, silver more than 3
percent and platinum more than 2 percent. []
Spot silver <XAG=> was bid at $26.78 an ounce against
$27.75, while platinum <XPT=> was at $1,699.49 an ounce against
$1,752 and palladium <XPD=> was at $680.47 against $709.72.
(Reporting by Jan Harvey; editing by Keiron Henderson)
