* Dollar climbs as investors trim risk exposure after Fed
* Equities, industrial commodities decline
* Concerns over U.S., Chinese growth weigh on platinum
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Aug 11 (Reuters) - Gold fell in Europe on Wednesday
as a 1 percent rise in the dollar outweighed potentially
supportive news that the U.S. Federal Reserve is holding
interest rates at record lows and extending quantitative easing.
Spot gold <XAU=> was bid at $1,196.80 an ounce at 0949 GMT,
against $1,201.85 late in New York on Tuesday. U.S. gold futures
for December delivery <GCZ0> climbed 60 cents to $1,198.60.
The metal rose as high as $1,207.05 on Tuesday after the Fed
kept interest rates at record lows and signalled a policy shift
away from cutting back on quantitative easing. []
The bank said it would use cash from maturing mortgage bonds
it holds to buy more government debt.
But gold failed to sustain gains as the dollar bounced back
from initial losses to rise strongly against the euro.
"The return of quantitative easing and the continuation of
the near-zero interest rate environment are supportive for gold,
but they were already (priced in) to the market," said VM Group
analyst Carl Firman.
He said the metal's link to the dollar was returning after
breaking down earlier this year.
"The correlation had reversed, to where strength in the
dollar saw strength in the gold price," he said. "(Now) we are
back to ... the negative correlation."
The dollar rose against the euro and climbed 1 percent
against a basket of currencies <.DXY> on Wednesday as investors
pared back risk exposure in the wake of steps announced by the
Federal Reserve to boost the economy. []
Strength in the U.S. unit curbs gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
On the wider markets, European shares fell 0.85 percent in
early trade, and world stocks hit a 1-1/2 week trough after the
Federal Reserve's assessment of the U.S. economy turned more
pessimistic. []
OIL, METALS SLIP
Among other commodities, oil prices fell below $80 an ounce,
weighed down by strength in the dollar, while base metals such
as copper also slipped as the market mulled economic and demand
growth prospects. [] []
"As gold is a commodity, movements in the broader commodity
sector have the potential to influence gold prices," HSBC
analyst James Steel said in a note.
"Gold's inclusion in the Goldman Sachs Commodity Index and
CRB, as well as the Dow-Jones-AIG index, helps reinforce the
positive relationship between gold and other commodities. Recent
oil price weakness helped undermine gold."
From a technical perspective, gold is now looking vulnerable
to further losses, although these are likely to be limited.
"With daily momentum now in overbought territory and 10-day
trendline support giving way, we look for a push back toward the
midpoint of the $1,219/$1,156 range at the $1,180 area," said
technical analysts at Barclays Capital in a note.
"While allowing for an overshoot, with gold approaching a
strong seasonal period, weakness should struggle to reach the
larger $1,156/$1,154 range lows," they said, however.
Among other precious metals, silver <XAG=> was at $18.11 an
ounce against $18.25, while platinum <XPT=> was at $1,534.10 an
ounce against $1,539.50 and palladium <XPD=> was at $471.93
against $473.75.
Prices of the platinum group metals, which are primarily
industrial in nature and are widely used in the automotive
sector, have come under pressure from concerns about the pace of
economic recovery.
"Speculation (that) slowing industrial activity in the U.S.
and China will reduce auto demand is weighing on the PGMs," said
James Moore, an analyst at TheBullionDesk.com, in a note.
(Reporting by Jan Harvey; Editing by Jane Baird)
