* Euro/dollar sinks back below $1.40 as Treasury yields rise
* Oil prices slide towards $67/bbl
(Updates throughout, changes dateline-pvs TOKYO)
By Jan Harvey
LONDON, June 8 (Reuters) - Gold fell in Europe on Monday,
extending the previous session's 2 percent losses, as the firmer
dollar reduced the precious metal's appeal as an alternative
asset and oil prices declined.
Spot gold <XAU=> was bid at $948.35 an ounce at 0852 GMT,
against $955.30 an ounce late in New York on Friday. Prices of
the metal tumbled during that session as the dollar
strengthened, leading to a close 2.4 percent below the previous
Friday's.
"The weekly close below $960 an ounce is seen as pretty
negative," said Calyon metals analyst Robin Bhar. "The dollar
has broken back below $1.40 versus the euro, and if it continues
to rally, that might put paid to commodities' rise."
The dollar climbed against a basket of currencies on Monday,
extending the sharp gains it posted late last week, as U.S.
Treasury yields rose to seven-month highs, prompting investors
to cover short-dollar positions. []
Strength in the U.S. currency has weighed on gold, as it
makes dollar-priced commodities such as bullion more expensive
for holders of other currencies.
Other commodities were also sold off, with oil, a key
indicator of interest in the asset class, falling more than $1 a
barrel or 2 percent, and industrial metals also softening. []
[]
Falling crude prices also dent interest in gold as a hedge
against oil-led inflation.
Among other assets, European shares were pulled lower by
losses in banking stocks, while financial markets could be in
for further volatility this week. []
"Potentially, more gains in equities could intensify the
sell-off in gold in the near term," said VTB Capital in a note.
INVESTOR APPETITE
Investors' appetite for gold also appeared to be waning,
with reports of fund selling of the precious metal on Friday
reflected in a small decline in the bullion holdings of the
largest gold ETF, New York's SPDR Gold Trust <GLD>. []
ETFs issue securities backed by physical stocks of a
precious metal. They proved popular earlier this year as
investors bought bullion to hedge against risk in other markets.
Among other precious metals, silver <XAG=> was at $14.91 an
ounce against $15.23, tracking moves in gold. Silver can be
bought as a cheaper alternative to gold, analysts said.
"The fact that the metals have been rising on investor and
speculator activity, rather than through robust fundamentals in
their own right, means the relationship between gold and silver
was especially strong during May," Standard Bank said in a note.
"At these elevated price levels, the gold:silver
relationship is likely to remain close," it added. "However, if
gold falters, silver would be likely to fall faster than gold."
ETF Securities said holdings of its London silver-backed
ETC, ETFS Physical Silver <PHAG.L>, declined 0.5 percent in the
week to June 5. []
Platinum <XPT=> was bid at $1,232.50 an ounce against $1,262
late in New York on Friday, while palladium <XPD=> was at $248
against $253. Holdings of ETF Securities' platinum and palladium
backed ETCs grew last week.
(Reporting by Jan Harvey; Editing by Anthony Barker)
