* Dollar firms to 2-year high on global economic woes
* Oil prices slide below $70/bbl, industrial metals slip
* Platinum tumbles 4 percent on demand fears
(Recasts, adds comment, changes dateline, pvs TOKYO)
By Jan Harvey
LONDON, Oct 22 (Reuters) - Gold prices slipped more than 2
percent in Europe on Wednesday as the dollar strengthened to a
two-year high against a basket of currencies, and oil prices
slipped nearly $3 a barrel.
Spot gold <XAU=> fell to a session low of $753.70 an ounce
before recovering to trade at $755.60/758.10 at 0941 GMT. Late
in New York on Tuesday it was quoted at $770.10 an ounce.
A slide in the cost of crude and other commodities such as
industrial metals is negating fears over inflation, against
which gold is often bought as a hedge, and pushing prices of the
precious metal lower.
"The focus has moved to the deflationary, recessionary
environment," said Simon Weeks, head of precious metals at the
Bank of Nova Scotia.
"You would expect commodities to come off in that kind of
environment, and gold has been caught up in that."
Oil has slipped sharply in recent sessions, falling close to
a 16-month low below $70 a barrel, as traders feared the gloomy
outlook for the global economy could translate into lower
demand. []
The market is awaiting the outcome of Friday's emergency
meeting of oil cartel OPEC, which is expected to announce a cut
in production quotas. Such a move could boost the oil market,
and consequently gold, analysts say.
Gold's other main external driver, the dollar, has
strengthened meanwhile to a two-year high against a basket of
currencies, as the dire outlook for the global economy prompted
investors to liquidate riskier assets in favour of the currency.
A firmer dollar tends to weigh on gold, as it dents the
precious metal's appeal as an alternative investment, and makes
it more expensive for holders of other currencies.
PLATINUM TUMBLES
Platinum tumbled more than 6 percent as the stronger dollar
added to pressure on the metal, which has been weighed down by
fears over falling demand from carmakers.
The automotive sector, which accounts for around half of all
platinum demand, has been hit hard by the prospect of recession.
A spate of carmakers in the U.S., Europe and Asia have reported
falling sales.
A newspaper reported on Wednesday that Toyota Motor Corp's
<7203.T> annual profit will likely halve in the year to next
March, while General Motors <GM.N> was separately reported to be
seeking outside investment. []
Nissan Motor Corp <7201.T> said on Tuesday it would cut
production in Japan, Britain and Spain in response to falling
demand. []
Spot platinum <XPT=> slipped as low as $831 an ounce, before
recovering to trade at $841/861, against $885.50 an ounce late
in New York on Tuesday.
Its sister metal palladium <XPD=> fared slightly better,
slipping to $174/182 from $179.50 an ounce.
"There are still some people out there who think (palladium)
has some potential and is cheap," said one Germany-based trader.
"It is easier to try to invest in a $180/oz commodity than
in a $860/oz commodity, and probably they think there will be
more substitution of platinum by palladium."
Among other precious metals, silver <XAG=> was trading at
$9.86/9.94 an ounce against $10.07.
(Reporting by Jan Harvey; editing by Peter Blackburn)
