* Oil climbs, dragging gold up from 13-month low
* Stronger dollar keeps lid on gains
* Platinum plummets to 4-yr low on dollar, demand fears
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 23 (Reuters) - Gold recovered on Thursday from a
13-month low hit overnight in Asia, as an uptick in oil prices
counterbalanced the stronger dollar, which is denting the
precious metal's appeal as an alternative investment.
Spot gold <XAU=> was quoted at $727.05/729.55 an ounce at
0917 GMT, against $727.65 late in New York on Wednesday. Earlier
it touched a low of $718.20, its weakest since September 2007.
Crude bounced back after a 7.5 percent fall on Wednesday as
investors focused on expectations oil cartel OPEC will opt to
cut output at its emergency meeting on Friday. []
However, a number of factors still count against gold.
"On the one hand there is the dollar, and on the other we
have recession fears weighing down on gold," said Commerzbank
analyst Barbara Lambrecht.
The dollar hit a fresh two-year high against the euro as
worries over the outlook for the global economy sparked a flight
to safety among investors. []
The dollar is usually considered the most important external
driver of gold. In addition to lessening bullion's appeal as a
currency hedge, a stronger U.S. currency makes dollar-priced
gold more expensive for holders of other currencies.
"The U.S. dollar (is firming) against the euro on continued
speculation of further rate cuts," said investment bank Dresdner
Kleinwort in a research note.
"As long as recession fears prevail and investors remain
jittery, gold and other metals are likely to remain under
pressure," it said.
Gold prices have gyrated in recent months as financial
markets have slumped. The World Gold Council said price
volatility spiked in the third quarter, rising to 39 percent
from 23 percent the quarter before. []
PLATINUM TUMBLES
Platinum slid another 6 percent, extending losses that have
seen the metal shed half its value since early August, as the
firmer dollar adds to pressure on prices.
The white metal primarily used as a component in
autocatalysts has already been hit by fears over falling demand
from carmakers, who account for half of platinum consumption.
Such fears are also affecting demand for other platinum
group metals, such as rhodium and palladium.
"Platinum, palladium and rhodium plummeted 54 percent, 59
percent and 82 percent respectively as auto manufacturers
reported a significant slowdown in global vehicle growth," said
Credit Suisse analyst David Davis in a note.
"Precious metal prices were also affected by the
disinvestment of around 200 000 ounces of platinum
exchange-traded funds."
Nonetheless, analysts say they believe the metal will bounce
in the medium term as supply remains tight, especially from
major producer South Africa.
Anglo Platinum <AMSJ.J>, the world's number one supplier of
platinum, said on Thursday its output of the metal fell 11
percent in the third quarter, but kept its annual production
target unchanged despite falling prices. []
Spot platinum <XPT=> was quoted at $824/848 an ounce, down
froim $831.50 late in New York on Wednesday. Earlier it touched
a low of $781, its weakest level since July 2004. Its sister
metal palladium <XPD=> edged down to $171/176 from $173.50.
Silver bucked the trend to strengthen, climbing to
$9.58/9.66 from $9.50 as firm demand from India supports prices.
Investment demand for the metal is also strong. The iShares
Silver Trust, the world's largest silver backed ETF, said its
holdings stood at a near-record 6,895.58 tonnes on Monday, the
last day for which figures are available.
(Reporting by Jan Harvey; editing by Peter Blackburn)
