PRECIOUS-Gold slips as dollar firms, oil falls

                                
 * Crude oil falls after inventory data
                                
 * Physical bargain hunters in the fray
                                
 
(Recasts, adds comment/detail)
                                
 By Jan Harvey
                                
 LONDON, Jan 13 (Reuters) - Gold slipped in Europe on
Wednesday as the dollar recouped losses against the euro and
inflation fears eased after oil prices fell.
                                
 Spot gold <XAU=> was bid at $1,124.00 a troy ounce at 1549
GMT, against $1,127.95 late in New York on Tuesday. U.S. gold
futures for February delivery <GCG0> on the COMEX division of
the New York Mercantile Exchange eased $5.1 to $1,124.30.
                                
 "The fall in gold is related to the dollar, which has
reversed early losses," said David Thurtell, analyst at Citi.
"Weakness in oil seems to be playing a part."
                                
 Crude oil <CLc1> prices fell after numbers from the U.S.
Energy Information Administration showed a rise in crude oil and
refined product stockpiles. [ID:nEIA000117] [O/R]
                                
 A firmer U.S. currency makes dollar-denominated commodities
cheaper for holders of other currencies, while gold is often
seen as an alternative currency to the dollar and as a hedge
against inflation and financial turmoil. [USD/]
                                
 Gold hit a record high of $1,226.10 a tonne on Dec. 3.
Analysts said lower gold prices in recent weeks meant more
activity in the physical market.
                                
 "This morning and last night, there were quite a few
physical buyers bargain hunting around in the marketplace, and
we saw some good demand out of India and elsewhere," said Afshin
Nabavi, head of trading at MKS Finance.
                                
 
                                
 COMMODITIES PRESSURED
                                
 Equities meanwhile recovered after early losses on the China
news, with European shares edging higher. [.EU] U.S. stocks rose
at the open on Wednesday. [.N]
                                
 Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, fell another 3.7 tonnes on
Tuesday, bringing their decline so far this year to nearly 18
tonnes, or 1.6 percent. [GOL/SPDR]
                                
 Silver <XAG=> was bid at $18.33 an ounce against $18.24.
Among other precious metals, platinum <XPT=> was at $1,559.50 an
ounce against $1,568.50, while palladium <XPD=> was at $417.50
against $421.50.
                                
 U.S. platinum and palladium exchange-traded funds launched
last Friday were met with buying interest, with about 170,000
ounces of metals added in the first two trading sessions, a
spokesman for ETF Securities, which operates the funds, said.
                                
 "Continued strong ETF investment in 2010 (potentially
amplified by the U.S. ETFs) would push the platinum and
palladium markets into deficit," said RBS Global Banking &
Markets in a research note.
                                
 "This underpins our longer-term bullish outlook on the PGMs,
our top pick being palladium."
  (Additional reporting by Pratima Desai; Editing by Sue Thomas)