* Dollar slips against the euro after U.S. GDP data
* Oil prices slide nearly 7 percent after Monday rally
* U.S. equities, European stocks slightly higher
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Nov 25 (Reuters) - Gold ended a hair lower
on Tuesday, recovering from earlier 2 percent losses, as the
dollar slid for the third consecutive session against the euro
after data showed that U.S. economy shrank more than expected
in the third quarter.
However, inflationary pressure after the U.S. Federal
Reserve unveiled massive plans to buy back mortgage debt should
limit losses, analysts said.
The U.S. central bank announced a $600 billion program to
buy mortgage-related debt and securities and a $200 billion
facility to support consumer debt securities. Rates on U.S.
30-year mortgages posted a record drop of 1-1/8 percentage
point to 4-7/8 percent on Tuesday []
[]
"The Fed is trying to inject as much liquidity as possible,
and we maybe in a very low interest rate environment in an
extended period of time when inflation becomes a major
concern," said Rob Kurzatkowski, futures analyst at
optionsXpress.
Spot gold <XAU=> was at $817.20 at 2:50 p.m. EST (1950
GMT), down 0.3 percent from Monday's close of $819.55 an ounce
in New York.
U.S. gold futures for December delivery <GCZ8> settled down
$1 at $818.50 an ounce on the COMEX division of the New York
Mercantile Exchange.
Analysts were confident that with interest rates expected
to fall in a number of key countries and the economic outlook
uncertain, the precious metal will continue to be supported.
"All the easing that is going on at the moment in various
parts of the world, with central banks pushing cheap funds into
the market, is increasingly going to (affect gold)," said BNP
Paribas analyst Michael Widmer.
The dollar fell against the single currency in early
afternoon trade after the release of third-quarter U.S. GDP
data which showed a larger than expected contraction in the
U.S. after a sharp drop in consumer spending. []
The commerce department revised the annual rate of decline
in third-quarter U.S. gross domestic product to 0.5 percent
from 0.3 percent previously forecast. []
A weaker dollar boosts the precious metal's appeal as an
alternative investment.
Firmer equities were also supporting gold, as selling of
the precious metal to meet margin calls eases. U.S. stocks
opened higher and European shares climbed after the Fed
mortgage support plan.
But falling oil prices were capping gold's gains. U.S.
crude futures slid more than 6 percent on Tuesday, undermining
interest in commodities as an asset class. []
Gold typically moves in line with crude prices, as it is
often bought as a hedge against oil-led inflation.
OUTLOOK SUPPORTS
Among other precious metals, spot silver <XAG=> was at
$10.27, down 1.9 percent from Monday's finish of $10.47.
Spot platinum <XPT=> fetched $859.00, 0.4 percent higher
than Monday's late quote of $856, while its sister metal
palladium <XPD=> fetched $191.00, up 0.3 percent from its
previous close of $190.50.
All the platinum group metals have suffered from fears over
falling demand from the automotive sector, which accounts for
around half of global platinum and palladium consumption.
Rhodium, around 80 percent of which is used by the car
industry, slipped below $1,000 an ounce for the first time
since 2004 as investors fretted over demand.
Rhodium <RHOD-LON> fell to $950 an ounce from $1,225 an
ounce on Nov 20.
"Demand for rhodium is absolutely dominated by the auto
industry - a quick glance at recent headlines and no-one should
be the slightest bit surprised that the metal is trading below
$1,000," said Mitsubishi precious metals strategist Tom
Kendall.
"No-one should be surprised either if there is more
downside to come," he added.
(Reporting by Frank Tangin New York and Jan Harvey in London;
Editing by Marguerita Choy)
