* Gold dips over 1 pct as risk aversion hits euro-dollar
* Oil, equities slide amid fears over economic outlook
* Silver slides more than 3 pct after Friday's 2-mth high
(Updates prices)
By Jan Harvey
LONDON, Aug 17 (Reuters) - Gold slipped to its lowest since
late July in Europe on Monday as the dollar firmed against a
basket of currencies and as a 2 percent decline in crude prices
dented the precious metal's appeal as an inflation hedge.
Silver tumbled nearly 4 percent after hitting a two-month
high on Friday, meanwhile, as a slide in global equity markets
prompted a rise in risk aversion, boosting the dollar versus the
euro but knocking prices of industrial commodities.
Spot gold <XAU=> hit a low of $934.40 an ounce and was bid
at $934.80 at 1117 GMT, against $945.85 late on Friday. U.S.
gold futures for December delivery <GCZ9> on the COMEX division
of the New York Mercantile Exchange fell $11.90 to $936.80.
"(Gold) is still forex driven," said Michael Kempinski,
senior gold trader at Commerzbank. "The euro/dollar is stuck in
the range and going down to the low end again."
He said disappointment that gold had failed to build on
gains that took it to a two-month high above $970 an ounce in
early August had prompted some investors to sell gold.
"Physical demand is not strong enough to absorb the
selling," he added. "We think we will see more at $925." The
largest gold-backed exchange-traded fund, the SPDR Gold Trust,
said it saw no new inflows on Friday. []
The dollar firmed against a basket of six major currencies
<.DXY> as risk aversion rose in the wider markets, prompting
buying of the U.S. unit as a haven from risk. []
A firmer U.S. currency usually weighs on gold, as it makes
dollar-priced assets such as bullion more expensive for holders
of other currencies and dents interest in the precious metal as
an alternative asset.
Caution over the outlook for the global economy also
battered stock markets, with European shares tumbling nearly 2.5
percent on Monday after retreating on Friday. []
World stocks fell more than 1 percent and U.S. stock futures
by more than 2 percent after Asian shares tumbled, with the
benchmark MSCI world equity index <.MIWD00000PUS> heading for
its biggest one-day loss since early July. [] []
COMMODITIES SLIP
Stock market losses and the stronger dollar also knocked
bellwether commodity oil. Weak consumer sentiment data in the
United States raised worries crude's recent rally has run ahead
of the global economic recovery. []
Base metals also slipped, pressuring silver, which as well
as being bought as an investment metal like gold is also widely
used in industries such as electronics manufacturing. []
Silver hit a two-month high of $15.16 an ounce on Friday
amid hopes the U.S. recession was bottoming. The gold/silver
ratio has risen to 66 from around 63 last session, suggesting
the metal is becoming a less attractive bet compared to gold.
Meanwhile the world's biggest primary silver producer,
Fresnillo <FRES.L>, said its silver production is expected to
rise 2-3 percent in 2010. []
Spot silver <XAG=> was bid at $14.09 an ounce against
$14.68. Platinum <XPT=> was at $1,231.50 an ounce against
$1,254.50, while palladium <XPD=> was at $268.50 versus $273.50.
Commerzbank analyst Eugen Weinberg said industrial precious
metals such as autocatalyst materials platinum and palladium
were likely to suffer along with base metals such as copper from
fears optimism over the economic outlook had been overdone.
(Additional reporting by Michael Taylor; Editing by Peter
Blackburn)
