* Dollar firms against euro, near 11-month high
* Oil dips by over $1 a barrel
* Physical buying supports
(Updates throughout, PVS Tokyo)
By David Sheppard
LONDON, Sept 5 (Reuters) - Gold eased on Friday as a strong
dollar and weaker oil prices pinned the metal under $800 an
ounce, although strong physical buying supported prices.
Gold also was pressured by rising risk aversion, which
pushed world stocks to their lowest in more than two years as
fears about the slowing global economy intensified.
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"The dollar has benefited from investors fleeing risk
outside of the United States, unwinding positions and moving
money back into dollars," said Lehman Brother's analyst Michael
Widmer.
"Rising risk aversion would generally be bullish for gold,
but the dollar seems to have been the main driver for so many
commodities lately."
Gold <XAU> slipped to a low of $790.35 in Asian trade,
before recovering slightly to $794.95/795.95 an ounce by 0954
GMT from $796.15/797.75 late in New York on Thursday.
Gold is often bought as an alternative asset to the dollar
when the U.S. currency is weak.
Despite gold's role as a safe-haven asset during times of
economic and political turmoil, the dollar's near 18-cent gain
against the euro since mid-July has knocked it from close to
$980 an ounce to beneath $800.
The dollar's recent strength has weighed on
dollar-denominated commodities across the board, with investors
unwinding commodity positions taken out as financial hedges
against the dollar's previous weakness.
Gold's role as a hedge against inflation concerns has been
diminished as a result, with a near $2 a barrel drop in oil
prices on Friday adding further downward pressure on the metal.
"Investors are extremely careful about taking new risk
positions, including oil and commodities, while funds are
shifting into the dollar," said Tatsuo Kageyama, a market
analyst at Kanetsu Asset Management.
"It could take a while before the market can fully restore
their confidence to shift back their positions into
commodities," Kageyama said.
Physical buying in India and the Middle East has kept gold
prices supported near $800 an ounce, with demand thwarted
earlier in the year by gold's rise above $1,000 an ounce.
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Platinum dropped as concerns over demand for autocatalysts
due to news of poor car sales in the United States prompted
investment funds to sell.
Spot platinum <XPT=> fell to $1,360.00/1,380.00 an ounce
from $1,391.50/1,411.50.
The U.S. has seen 10 straight months of declining car sales
-- the longest such downturn since the 2001 recession.
Autocatalysts, used to clean exhaust fumes, account for
more than half of global platinum use.
Platinum's sister metal palladium <XPD=> eased to
$275.00/283.00 from $281.50/289.50, while silver was almost
unchanged at $12.72/12.77 from $12.74/12.80 an ounce.
(Additional reporting by Chikafumi Hodo in Tokyo; editing by
Michael Roddy)
