* Gold retreats from highs as dollar firms
* Platinum slips lower as demand fears weigh
(Adds comment, updates prices)
By Jan Harvey
LONDON, July 21 (Reuters) - Gold was firmer in late European
trading on Monday but off early highs as the dollar strengthened
a touch against the euro, denting the precious metal's appeal as
a currency hedge.
Gold <XAU=> was trading at $962.40/963.40 an ounce at 1446
GMT from $955.45/957.05 an ounce late in New York on Friday,
when it fell to a one-week low of $949.50.
A weaker dollar and more than a $2 per barrel gain in crude
prices on Monday took gold to a session high of $968.25 earlier
in the day.
But the precious metal slipped from highs as the dollar
firmed against the euro after Bank of America reported
stronger-than-expected quarterly earnings, helping allay fears
over the health of the U.S. financial sector. []
"Early U.S. dollar weakness and oil price strength has been
reversed, (taking) the top off the gold price," said David
Thurtell, an analyst at BNP Paribas.
Gold tends to move in the opposite direction to the dollar,
as it is bought as a hedge against weakness in the U.S.
currency. A softer greenback also makes dollar-priced gold
cheaper for holders of other currencies.
The precious metal also usually trades in line with oil,
because of its appeal as an inflation hedge and its strength in
crude prices boosts interest in commodities in general.
Oil rose more than $2 a barrel early on Monday after its
biggest one-week slide on record as talks over Iran's nuclear
programme ended in stalemate, dampening hopes the row would soon
be resolved.
However, it has since eased to trade only a little higher as
the dollar has firmed. []
Fears of further unrest in the Middle East also supported
gold, often bought as a hedge against geopolitical risk.
Among other precious metals, platinum gave up the gains it
posted earlier on Monday on bargain hunting, as investors
worried about the outlook for demand.
Platinum prices dipped over $180 an ounce, or 9 percent,
over the course of last week on demand fears and expectations
supply disruptions linked to a power shortage in major producer
South Africa would be less pronounced than expected.
The metal rebounded early on Monday from a low of $1,836.50
it hit on Friday -- its weakest level since May 2 -- as
investors took advantage of falling prices to buy into the
metal.
"After its slump last week platinum should bottom now," said
Commerzbank analysts in a note. "Despite all the concerns about
weaker demand from the car industry and the lower risks to
supply, there is still a deficit on the platinum market."
Spot platinum <XPT=> was trading at $1,847.50/1,867.50 an
ounce from $1,846.50/1,866.50 late in New York on Friday.
Among other precious metals, spot palladium <XPD=> was
little changed at $413.50/421.50 an ounce from $411.50/419.50
late in New York, while silver <XAG=> rose to $18.31/18.36 an
ounce from $18.12/18.20 late in New York.
(Reporting by Jan Harvey; editing by Christopher Johnson)
