* Gold at lowest level since September 2007
* Stronger dollar pressures precious metals
* Platinum plummets to 4-yr low on dollar, demand fears
(Updates throughout, adds comment)
By Julie Crust
LONDON, Oct 23 (Reuters) - Gold fell on Thursday to a
13-month low as the strong dollar curbed demand for bullion as
an alternative investment, but pared losses as the U.S. currency
slipped to session lows against the euro and oil firmed.
Platinum and palladium also dropped on worries over demand
from automakers who use the metals to make catalytic converters.
Spot gold <XAU=> was quoted at $721.15/723.65 an ounce at
1521 GMT, against $727.65 late in New York on Wednesday. Earlier
it touched a low of $697.45, its weakest since September 2007.
U.S. COMEX December gold futures <GCZ8> fell $11.50 to
$723.50 an ounce.
Matthew Turner at commodity analysts VM Group said gold had
been outperforming most metals because of its perceived safe
haven value, but that some investors were now selling.
"Gold seems like it has slightly caught up with the other
commodities," he said.
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.
However, it later turned negative against the euro as firmer
U.S. stocks prompted some profit taking, allowing gold to
recover some lost ground. []
Firming oil prices are also supported gold. Crude rose more
than $2 a barrel as investors bet on a output cut from oil
cartel OPEC at Friday's emergency meeting. []
However bullion remains under pressure from fears over
falling demand from India, the world's biggest consumer of
physical gold.
"Industry analysts have reported the demand for gold during
the build-up to the Indian festive season has been muted when
compared to previous years," Credit Suisse said in a note.
Turner said in local currencies, prices for Indian consumers
have not fallen much but that recent price swings were a factor.
"Volatile prices can be negative for demand," he 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 more than 7 percent to its session lows,
extending losses that have seen prices fall by half since early
August, as the firm dollar added to pressure on prices.
The white metal has already been hit by fears over falling
demand from carmakers, who account for half of platinum use.
Fears over the outlook for the automotive sector were
fuelled by reports that General Motors Corp <GM.N> will begin
involuntary layoffs of salaried workers. [].
"Recession fears are especially showing in the auto sector,
where we have seen a slowdown in car sales," said Commerzbank
analyst Barbara Lambrecht. "These recession fears are especially
putting pressure on platinum."
However analysts say the platinum sell-off is likely to
reverse in the medium term as supply concerns return.
Anglo Platinum <AMSJ.J>, the world's number one supplier,
said its output fell 11 percent in the third quarter, but kept
its annual production target unchanged despite falling prices.
[]
Spot platinum <XPT=> was quoted at $798.50/822.50 an ounce,
down froim $831.50 late in New York on Wednesday. Earlier it
touched a low of $781, its weakest since July 2004. Its sister
metal palladium <XPD=> edged down to $170.50/174 from $173.50.
Silver bucked the trend to strengthen, climbing to
$9.74/9.82 from $9.50 as firm Indian demand supported 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.
(Additional reporting by Jan Harvey; Editing by David Evans)
