* Gold hits one-year low on dollar rally, cash run
* Dollar firms to two-year high on global economic woes
* Other precious metals also hit multi-year lows
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Oct 22 (Reuters) - Gold tumbled to its
weakest in more than a year on Wednesday, as the dollar surged
and stock market recession fears triggered a broad commodity
sell-off.
Investors dumped gold, sometimes considered a safe haven,
along with risky assets and opted for cash on a day when the
Dow Jones industrial average dropped more than 500 points.
Spot gold <XAU=> was at $726.40 an ounce at 3:15 p.m. EDT
(1915 GMT), down 5.7 percent from Tuesday's close of $770.10.
It bottomed at $719.60, which marked its weakest since Sept.
18, 2007.
"When you have the dollar rising, and commodity prices
going down, obviously there is less concern about inflation,
and less of a reason to be long gold," said David Rinehimer,
director of Citi Futures Perspective in New York.
Rinehimer said risk-averse deleveraging across all assets
contributed to the dollar's strength, which led to selling
throughout the commodity sector.
Broad-based commodity index Reuters/Jefferies CRB dropped
4.5 percent to near its 4-1/2-year low.
U.S. gold contract for December delivery <GCZ8> settled
down $32.80, or 4.3 percent, at $735.20 an ounce on the COMEX
division of the New York Mercantile Exchange.
Gold's other main external driver, the dollar, jumped to a
two-year high as a deteriorating global economic picture and
worries that financial market stability was far away spurred
investors to liquidate risky assets. []
"This is quite heavily a dollar story," Stephen Briggs,
commodities strategist at RBS Global Banking & Markets, said.
"But in addition, investors are just selling everything.
Gold is not immune from that, not least because it is a
constituent of most of the indices."
Oil slipped sharply, falling to a 16-month low below $67 a
barrel, as traders feared the gloomy outlook for the global
economy could translate into lower demand. []
The market is now 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.
PLATINUM, OTHER PRECIOUS METALS TUMBLE
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. []
Spot platinum <XPT=> was at $830.50, down 6.2 percent from
Tuesday's late quote of $885.50. It bottomed at $824.50, its
weakest since December 2004.
Its sister metal palladium <XPD=> traded at $175.50, down
2.2 percent from Tuesday's close of $179.50. It hit a near
3-1/2-year low of $172.50 an ounce on Wednesday.
"There are still some people out there who think
(palladium) has some potential and is cheap," one German-based
trader said.
"It is easier to try to invest in a $180 per oz commodity
than in a $860 per oz commodity, and probably they think there
will be more substitution of platinum by palladium."
Among other precious metals, silver <XAG=> was last at
$9.42, after bottoming at $9.35 an ounce, a 2-1/2-year low,
down 6.4 percent from Tuesday's finish of $10.07.
(Editing by Marguerita Choy)
