* Gold falls 5 pct, silver nearly 10 pct, platinum 6 pct
* Dollar hits new 2-year high vs the euro
* Oil below $64 a barrel to new 16-month low
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 24 (Reuters) - Gold fell nearly 5 percent in
Europe on Friday as a surge in the U.S. dollar curbed interest
in the precious metal as a currency hedge, and oil prices fell
more than $2 a barrel.
Platinum and silver tumbled 5 percent and 8 percent in
gold's wake to touch multi-year lows.
Spot gold <XAU=> fell to $684.90 an ounce, a new 13-month
low, before recovering to trade at $686.20/688.20 at 0923 GMT.
It was quoted at $720.00 in New York late on Thursday.
"Gold is following the dollar and oil," Wolfgang
Wrzesniok-Rossbach, head of sales at precious metals trading
house Heraeus, said. "The physical demand we are seeing is not
enough to stem the tide here."
Prices are suffering from a combination of liquidation by
speculative investors and weak demand for jewellery, he said.
Buying in the biggest gold market, India, is particularly soft
ahead of the festival season there due to weakness of the rupee.
Gold has slipped some $180 or 20 percent from a month ago,
pressured by a recovery in the dollar and a sharp slide in oil
prices.
The dollar hit a fresh two-year high against the euro on
Friday as falling share prices in Asia and Europe prompted
investors to seek safety in the U.S. currency. []
A stronger dollar typically pressures gold, which is often
bought as an alternative investment to the currency.
The other main external driver of gold, oil prices, were
also negative for the metal, with oil falling below $64 a barrel
on Friday, to new 16-month lows on gloom about a global economic
downturn and despite an OPEC agreement to cut output.
[]
Oil cartel OPEC said at its emergency production meeting on
Friday it would cut crude output by 1.5 million barrels per day
from September production levels, effective from Nov 1.
[]
The group had been expected to cut by up to 2 million
barrels per day to safeguard prices after recent falls.
"Crude oil has been heading lower again since the start of
trading in Asia on fears that the cut might not be sufficient to
compensate (for) the shortfall of demand due to a global
recession," Dresdner Bank said in a research note.
"Gold is likely to remain under pressure."
In New York, bullion holdings of the world's largest
gold-backed exchange-traded fund, the SPDR Gold Trust <GLD>
slipped 1 percent to 747.06 tonnes on Thursday.
Gold demand from ETFs, which issue securities backed by
physical bullion, has been a major plank of support for prices
in recent years.
SILVER, PLATINUM SLIDE
Among other precious metals, silver tumbled nearly 10
percent to a session low of $8.74, its weakest level since
January 2006, tracking losses in gold. It was later trading at
$8.77/8.85 against $9.66.
Platinum meanwhile slumped to a near five-year low of $752
an ounce, as the firmer dollar added to existing pressure on the
metal from a fall in demand linked to expectations for slowing
economic growth.
The white metal, primarily used in the manufacture of
catalytic converters, has shed more than 50 percent of its value
since August on fears of slowing demand from the automotive
sector.
Platinum <XPT=> was quoted at $757/777, down from $802.50,
while palladium <XPD=> was at $166/176, against $165.50.
"Although silver and platinum group metals are trading cheap
relative to gold we would not expect these markets to start
outperforming gold until reflation takes hold," Deutsche Bank
said in a note.
(Reporting by Jan Harvey; editing by Sue Thomas)
