* Dollar climbs vs euro, slides against the Japanese yen
* Equities, industrial commodities decline
* Concerns over U.S., Chinese growth weigh on platinum
(Updates prices, adds comment)
By Jan Harvey
LONDON, Aug 11 (Reuters) - Gold turned higher on Wednesday,
shrugging off a 1 percent rise in the dollar versus the euro, as
concerns over the outlook for the U.S. economy and the potential
for further monetary easing sparked haven buying of the metal.
Spot gold <XAU=> was bid at $1,203.90 an ounce at 1306 GMT,
against $1,201.85 late in New York on Tuesday. U.S. gold futures
for December delivery <GCZ0> climbed $8.20 to $1,206.20.
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. Prices fell back
below $1,200 early on Wednesday as the dollar rallied, however.
The Fed said on Tuesday it would use cash from maturing
mortgage bonds it holds to buy more government debt to help pin
down borrowing costs. []
"The initial reaction was a bit of a knee-jerk for both the
dollar and gold, so gold went up and the dollar went off," said
Credit Suisse analyst Tom Kendall. "And then this morning,
sentiment seemed to reverse."
"Now I think the inference is that this is probably just one
step on the way to some more substantive QE down the line, and
that the Fed is running out of room for manouevre."
The dollar rose against the euro <EUR=>, but slipped to a
15-year low against the yen <JPY=> as the Fed's steps to revive
the U.S. economy pushed U.S. Treasury yields lower. []
The move strengthened expectations that U.S. interest rates
would stay at record lows. Low interest rates are a key support
for the gold market, as they cut the opportunity cost of holding
non-interest bearing assets like bullion.
On the wider markets, European shares fell after the Fed's
pessimistic view of the U.S. economy stung investors' confidence
on the sustainability of the economic recovery. U.S. stock
futures also dropped sharply. []
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. [] []
Overall raw materials prices are being pressured by concerns
over the Fed's lacklustre view on the U.S. economy. This could
support gold, however.
"If we see a period of significantly lower U.S. growth then
we would expect to see knock-on effects on the rest of the
global economy, which seems to be a risk that is being
underpriced," Barclays Capital said in a note.
"Slower U.S. growth should lead to dollar strength against
most risky currencies," it added.
"Such an environment is likely to prove to be favourable for
gold prices particularly given that the recent upside in prices
was driven by the resurgence in safe-haven buying."
Among other precious metals, silver <XAG=> was at $18.06 an
ounce against $18.25, while platinum <XPT=> was at $1,533.45 an
ounce against $1,539.50 and palladium <XPD=> was at $471.50
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 William Hardy)
