* Gold slips as oil weakens, dollar firms
* Safe haven buying limits losses
* Platinum moves up on fresh power problems in South Africa
(Updates prices, adds comment)
By Jan Harvey
LONDON, July 22 (Reuters) - Gold eased on Tuesday as a
recovery in the dollar and weakening oil prices pulled the
precious metal from its earlier highs.
However, investors worried about the outlook for the U.S.
economy are still buying into the precious metal as a safe haven
from financial risk, limiting losses.
"Gold is still reacting to ongoing concern over the economic
outlook," said Standard Chartered analyst Daniel Smith. "People
continue to be in gold for its safe haven status."
Spot gold <XAU=> slipped to $959.10/960.10 an ounce at 1423
GMT from $961.75/963.15 an ounce late in New York on Monday.
The dollar strengthened in early afternoon trade, helped by
weaker U.S. crude futures and comments from U.S. Treasury
Secretary Henry Paulson that suggested efforts are being made by
the government to solve the financial crisis. []
Strength in the U.S. currency pressures gold, as it reduces
the precious metal's appeal as a currency hedge. A firmer
greenback also makes the precious metal more expensive for
holders of other currencies.
Oil also helped pull gold from its highs, as crude futures
slipped. Concerns over the impact of tropical storm Dolly, which
it was feared would hit oil installations in the Gulf of Mexico,
are easing. []
Rising fears over the economic outlook and volatility in the
equity markets were key factors in pushing gold to a 4-1/2 month
high of $987.75 last week.
European equities fell sharply on Tuesday as telecoms and
technology companies fell after Vodafone's revenue warning,
while Wall Street slipped at the open after a disappointing
outlook from Apple and after Wachovia reported a quarterly loss.
[]
With the stock markets still volatile, investors are turning
to the precious metal as an alternative investment to stocks and
shares.
ETF DEMAND FIRM
Investment interest in the precious metals is firm, with
holdings of the SPDR Gold Trust in New York -- the largest
gold-backed exchange-traded fund -- rising to 705.59 tonnes on
Monday, close to a record high.
Silver holdings of the United States' largest silver-backed
ETF, iShares Silver Trust, were also at a record 6,092.31 tonnes
on July 16, the last day for which holdings were published.
"We see ETF (demand) holding up pretty well," said Smith.
"The ETFs are pretty close to record highs."
Among other precious metals, platinum rebounded, climbing
more than 2 percent to a session high of $1,880 an ounce, as
South African power utility Eskom reported a further electricity
outage.
South Africa is the world's largest producer of platinum.
Eskom said it has shut down one of two electricity
generating units at its Koeberg nuclear power plant after a
technical fault. []
"Although this primarily impacts the Western Cape area and
not the key mining provinces, it does increase the vulnerability
of the power grid, especially as Eskom announced last week that
its reserve margin was well below its target," said Barclays
Capital in a note.
Platinum group Johnson Matthey said in its first-half
earnings report that it had seen strong growth in autocatalyst
sales in Asia, though it added sales have dropped in North
America.
Autocatalyst manufacturing is a key use of platinum and
fears over future demand, notably in the United States, put
platinum prices under pressure recently.
Spot platinum was trading at $1,852.00/1,872.00 an ounce
against $1,837/1,857 in New York, recovering from an 11-week low
of $1,825.50 it hit earlier in the session.
Silver <XAG=> slipped to $18.29/18.25 an ounce from
$18.35/18.43 late in New York. Spot palladium <XPD=> was steady
at $412.00/420.00 an ounce from $410.50/418.50 late in New York.
(Reporting by Jan Harvey; Editing by Clare Black)
