(Recasts with comment, prices, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, June 12 (Reuters) - Gold slipped on Thursday,
shedding more than 1.5 percent at its session low, as the dollar
rebounded against the euro after Wednesday's losses, and oil
prices eased.
Gold <XAU=> fell to $869.00/869.50 an ounce at 0955 GMT from
$881.15/882.55 late in New York on Wednesday, having earlier
touched an intraday low of $867.00.
The precious metal came under pressure as the U.S. currency
hit a one-month high against a basket of currencies.
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Gold has see-sawed this week in line with the dollar and the
euro as expectations of U.S. and euro zone interest rate hikes
have fluctuated.
"Gold has been volatile, but within a relatively narrow
trading range," said Standard Bank analyst Walter de Wet.
"We are seeing gold tracking forex, but the moves have been
a lot less amplified than they used to be. There is so much
uncertainty regarding inflation and where crude oil is going."
Falling crude prices are pressuring gold, which is often
bought as a hedge against oil-led inflation. Oil prices slipped
after rising sharply on Wednesday on the back of a further
decline in U.S. crude stocks. []
But with prices still firm over $130 a barrel and within
reach of the all-time high they set at the end of last week,
"crude oil definitely provides a floor in gold prices", said de
Wet.
RATE SPECULATION
Forex, however, remained the main driver. The dollar has
taken a firmer tone this week after a raft of comments from U.S.
officials expressing concern over the currency's weakness.
U.S. Federal Reserve Chairman Ben Bernanke's increased
emphasis on rising inflation has been interpreted as a sign that
an interest rate hike may be on the cards later this year.
However, with expectations for a euro zone rate hike also
rising, currency markets have been volatile this week, leading
to similar fluctuations in gold.
The precious metal benefits from a weaker dollar as it is
seen as an alternative investment, while a softer U.S. currency
also makes dollar-priced metals such as gold cheaper for holders
of other currencies.
Any further rhetoric on rates in either the euro zone or the
U.S. is likely to have a significant impact on currencies, and
therefore on gold.
"Given the likelihood of further rate speculation/economic
data reaction, gold could see further slippage," said
TheBullionDesk.com analyst James Moore.
"However, given the increase in inflationary pressure, the
metal should continue to find strong scaled down support back
towards psychological support around $850."
Platinum <XPT=> tracked gold lower to $2,012.50/2,032.50
against 2,032.50/2,052.50 in New York on Wednesday.
The white metal has largely moved in tandem with gold as the
dollar has fluctuated, but is also benefitting from fears over
supply from major producer South Africa.
Platinum therefore "looks likely to outperform gold as
dollar strengthens", Fairfax IS analyst John Meyer said.
The republic, which produces around 80 percent of global
platinum supply, is suffering from a power shortage that is
expected to cut metals output.
Major industrial users such as miners have been told they
may receive only 90 percent of their usual electricity supply
until as late as 2013.
Although the effect of this on production is as yet unclear,
fears platinum supply could be affected have underpinned prices
and are likely to continue to do so.
Among other precious metals, palladium <XPD=> edged down to
$423.50/431.50 against 424.00/432.00, while silver <XAG=>
tracked gold lower to $16.57/16.63 from $16.88/16.95.
(Reporting by Jan Harvey; editing by Christopher Johnson)
