* Gold ends slightly higher, in line with recovering oil
* Firmer tone to dollar damps initial bargain hunting
* Platinum continues descent as demand fears persist
(Updates with closing prices, market activity)
By Jan Harvey and Raissa Kasolowsky
LONDON, July 24 (Reuters) - Gold rose in tandem with higher
oil prices to end a tad higher on Thursday, but an overall
firmer dollar dampened bargain hunting that had supported
bullion after it had hit a two-week low.
Gold <XAU=> was at $923.00/924.00 by New York's last quote
at 2:15 p.m. EDT (1815 GMT), up from $921.35/922.95 late in New
York on Wednesday. Earlier in the session the precious metal
hit an intraday low of $916.40 -- its weakest since July 9.
"Gold remains on the defensive, following the shift in
sentiment after the start of this week," said Jon Nadler,
senior analyst at Kitco Bullion Dealers in Montreal.
"The $915 area remains a support zone that must hold, lest
the metal next tries to find buyers under $900 per ounce."
The euro <EUR=> fell to a two-week low against the dollar
after a slew of weak European economic data highlighted slowing
growth and cooled expectations of more interest rate rises.
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A stronger greenback usually pressures gold, which is often
bought as an alternative to the U.S. currency.
Oil <CLc1> ended $1.05 higher at $125.49 a barrel due to
chart-based buying. Gold typically moves in line with crude, as
it is often bought as a hedge against oil-led inflation.
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"Clearly, final demand for crude oil products is falling
because of high prices," said Walter de Wet, an analyst at
Standard Bank. "Therefore, precious metals can expect little
support from the crude front."
Investment interest in the precious metal remains
relatively soft compared with recent months. Gold holdings of
the SPDR Gold Trust, the world's largest exchange-traded fund
backed by physical bullion, slipped 2.5 percent Wednesday, the
fund said.
Its holdings have fallen nearly 5 percent in the past two
days to 673.40 tonnes, against more than 700 tonnes at the
beginning of the week. []
U.S. gold for August delivery <GCQ8> settled down 50 cents
at $922.30 an ounce on the COMEX division of New York
Mercantile Exchange.
Analysts remain bullish on prices for the remainder of the
year, however, with a poll of 40 analysts and traders conducted
by Reuters showing on Thursday a mid-range forecast of $930 an
ounce, 30 percent above last year's average price.
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PLATINUM
Platinum and palladium also remained under pressure amid
fears about demand from car manufacturers, with both metals
near six-month lows.
Platinum prices in particular have slipped sharply over the
last 10 days. The metal is currently trading nearly 25 percent
below its March record high of $2,290 an ounce.
Both platinum and palladium are widely used in car
manufacturing as a component in catalytic converters.
As well as the weaker demand outlook, the metals also were
reacting to easing fears over supply from South Africa, which
produces 80 percent of the world's platinum.
With the power situation in the republic, which earlier
this year took prices to record highs, now looking more stable,
analysts see further downside to the metal.
"We still see all of the platinum group metals as
vulnerable to further liquidation by physical holders of the
metal, the ETF players in particular," said JP Morgan analyst
Michael Jansen.
Spot platinum <XPT=> touched a session low of $1,702.00 an
ounce, its weakest level since Jan. 31, before recovering
slightly to $1,709.50/1,729.50, against $1,744.00/1,764.00 an
ounce in New York.
Spot palladium <XPD=> was at $382.00/390.00, compared with
$383.00/391.00 late in New York, having earlier touched an
intraday low of $371.50, its weakest since January 25.
Among other precious metals, spot silver <XAG=> traded
slightly higher at $17.39/17.45 an ounce, against $17.33/17.38
late in New York on Wednesday.
(Additional reporting by Frank Tang in New York)
