* Dollar ticks higher as risk appetite recedes
* Commodities fall after gains earlier this week
* SPDR gold ETF posts fresh outflow
(Updates prices, adds details and comments)
By Jan Harvey and Martina Fuchs
LONDON, July 29 (Reuters) - Gold eased in Europe on
Wednesday as the dollar firmed on rising risk aversion, which
prompted losses across commodities and put currencies seen as
higher-risk under heavy selling pressure.
Spot gold <XAU=> was bid at $934.65 an ounce at 1143 GMT,
against $936.35 in early trade. U.S. gold futures for August
delivery on the COMEX division of the New York Mercantile
Exchange <GCQ9> slipped $4.30 to $934.80 an ounce.
Precious metals fell along with many other commodities, such
as oil and copper, after a slide in Chinese equities hit risk
appetite and lifted the dollar versus a basket of currencies.
Chinese stocks <> dropped 5 percent on Wednesday, their
biggest daily drop in eight months and ending a five-day rally,
on concerns banks could restrict lending. At one point, equities
were close to 8 percent lower. []
"There is some concern that the (Chinese) government could
try to tighten up credit conditions in China, which could be
negative for lots of stock markets and therefore positive for
gold," Daniel Smith, an analyst at Standard Chartered, said.
At 1143 GMT, the dollar <.DXY> was up 0.49 percent at $79.11
against a basket of major currencies. U.S. data showing U.S.
durable goods orders is due at 1230 GMT, but is not expected to
have a major impact on the market.
"The dollar is seen as a safe haven, so if... people feel
assured about recovery, they are happy to sell the dollar and
buy risk assets such as commodities," said Citigroup analyst
David Thurtell.
"If you have wobbles over China, the dollar picks up, and
commodities come off," he said.
In a note, MF Global said talk about anti-speculation
measures by the U.S. Commodity Futures Trading Commission (CFTC)
could also add to selling pressure.
Oil <CLc1> fell towards $65 a barrel, while copper hit its
lowest level in a week on rising risk aversion. [] []
SLOW DEMAND
Investment demand for gold remained lacklustre, with a
further 3.36-tonne outflow from the world's largest
bullion-backed exchange-traded fund, the SPDR Gold Trust, adding
to a recent retreat in ETF holdings. []
Physical demand for gold remains soft overall, with seasonal
weakness and high prices hurting consumption in the key Indian
and Middle Eastern markets. This weakness in underlying demand
makes gold vulnerable to a sell-off, analysts said.
"Given the recent build in speculative longs and ETF
redemptions yesterday, combined with very limited physical
interest, gold remains vulnerable to a deeper correction," said
James Moore, an analyst at TheBullionDesk.com, in a note.
On the supply side, the World Gold Council said official
sector sales under the Central Bank Gold Agreement currently
stand at just 140 tonnes so far this year, well below the total
500 tonnes allowed under the pact. []
Among other precious metals, platinum <XPT=> was at $1,174
an ounce against $1,187.50 early on Wednesday, while palladium
<XPD=> was at $254.50 against $255.
The two metals climbed to multi-week highs earlier this week
as firmer stocks boosted hopes demand for the autocatalyst
materials would pick up. However, analysts say the uptick in the
dollar is being used as an opportunity to take profits.
Silver <XAG=> was at $13.55 an ounce against $13.69.
(Editing by Sue Thomas)
