* Oil up as U.S. Dept of Energy reports product stock fall
* Dollar firms amid fears of global slowdown
* Jewellery demand dips in Q2 but seen firmer as prices ease
(Recasts, adds comment, updates prices)
By Jan Harvey
LONDON, Aug 13 (Reuters) - Gold climbed on Wednesday as
crude prices firmed in response to a dip in U.S. oil product
stocks, and on expectations jewellery demand will recover after
the precious metal's recent price slip.
Gold <XAU=> rose to $821.80/822.70 an ounce at 1449 GMT from
$814.50/815.50 an ounce late in New York on Tuesday.
"The oil market has been (significant) not just because it
is a leading commodity but because the dollar has been reacting
to it," said VM Group analyst Matthew Turner.
Rising oil prices typically benefit gold, which is often
bought as a hedge against oil-led inflation. Firmer oil also
boosts interest in commodities as an asset class, and can have
wider implications.
Crude rose by more than $2.50 to above $115 a barrel after
the U.S. Dept of Energy reported a sharp fall in gasoline
inventories and a larger than expected dip in distillate stocks.
[]
On Tuesday, gold tumbled to $801.90 ounce, its lowest level
in eight months, largely on a surge in the dollar. The metal
usually moves in the opposite direction to the U.S. currency, for
which it is often bought as an alternative investment.
In euro terms, gold fell to 538.80 euros an ounce, also its
weakest since December.
The precious metal ticked up in early European trade on
Wednesday as the dollar came off highs against the euro, but has
held those gains even as the U.S. currency recovered.
"The fact that precious metals are higher in spite of the up
day in the U.S. dollar today suggests that there is some
physical offtake in bullion down at these lower prices," JP
Morgan analyst Michael Jansen said.
According to report by the World Gold Council, global gold
jewellery demand was down 24 percent in the second quarter as
high and volatile prices curbed buying. []
However, as gold prices have fallen sharply, demand from the
jewellery industry is likely to pick up again, analysts say.
DATA WATCHED
Looking forward, retail sales and industrial production data
from the United States and European inflation data are all due
this week, and are likely to affect the currency markets, a key
driver of gold.
Among other precious metals, silver <XAG=> was steady at
$14.59/14.64 an ounce from $14.60/14.66 late in New York.
Holdings of the world's largest silver-backed
exchange-traded fund, the iShares Silver Trust <SLV.A>, dipped
half a percent to 6,166.57 tonnes on Monday, the last day for
which the trust has reported.
Platinum bounced back above $1,500 an ounce on Wednesday
before easing, having shed more than 15 percent in the two weeks
to Tuesday's close on fears over weakening demand from the car
industry.
Spot platinum <XPT=> rose to a session high of $1,510.00 an
ounce before easing to $1,486.50/1,506.50 from
$1,469.50/1,489.50 late in New York.
Palladium meanwhile slipped back towards key support at $300
an ounce. On Tuesday, it touched a low of $298.00, its weakest
level in almost two years, before recovering.
Spot palladium <XPD=> was at $303.00/311.00 an ounce from
$305.00/313.00 an ounce.
(Reporting by Jan Harvey; editing by Michael Roddy)
