* Sell-off sends gold to five-week low below $900
* Dollar strengthens after better-than-expected jobs data
* Banks cut platinum outlook on better supply, demand balance
(Recasts, adds comment, updates prices)
By Jan Harvey
LONDON, July 30 (Reuters) - Gold tumbled almost 3 percent to
a five-week low below $900 an ounce on Wednesday as a stronger
dollar, weaker oil and receding inflation fears prompted a
sell-off.
Gold <XAU=> dipped to $894.30/895.30 an ounce at 1349 GMT
from $918.80/920.30 an ounce late in New York on Tuesday.
Earlier in the session it slipped as low as $893.50, its weakest
level since June 26.
"(Gold) has suffered from some dollar-bullish news around,"
said Simon Weeks, director of precious metals at the Bank of
Nova Scotia.
"The dollar has been quite resilient of late. We had some
decent consumer confidence numbers yesterday from the States,
the ADP employment numbers were better today, so ... there seems
to be an air of dollar bullishness around."
The precious metal weakened in early trade, slipping below
support around $913 an ounce after U.S. economist and trader
Dennis Gartman said he was exiting his gold positions.
Further selling then took the metal to $903 an ounce, before
a sharp strengthening in the dollar after above consensus ADP
jobs data sent it lower. []
Gold typically moves in the opposite direction to the
greenback, as it is often bought as a hedge against currency
weakness. A stronger greenback also makes gold more expensive
for holders of other metals.
The U.S. Federal Reserve also said it is boosting liquidity
in the financial markets. The Fed said it will extend two
lending facilities through to January, and announced new
coordinated action with the ECB. []
Gold is also suffering from receding inflation fears, which
were a key factor driving the yellow metal to new all-time highs
earlier this year.
"The reality for the gold market is that inflation risks are
leaving the price rapidly, courtesy of the weaker growth outlook
and the fact that central banks are still trying to sound as
hawkish as the underlying growth outlook allows them to be,"
said JPMorgan in a note.
Weaker oil prices are also pressuring gold. Traders will be
closely watching the crude market later in the session, amid
expectations prices could fall further after U.S. stockpile data
is released at 1430 GMT.
PLATINUM LANGUISHES
Platinum prices languished on Wednesday as the market
worried about the outlook for demand and fears over supply
eased. Two banks, Goldman Sachs and Standard Chartered, cut
their platinum price forecasts for 2008 and 2009.
Standard Chartered said it now sees the metal trading at an
average $1,750 an ounce in the fourth quarter of this year and
$1,675 in 2009, against previous forecasts of $2,050 and $2,105
respectively.
The bank said while it had expected to see fresh power
outages from electricity company Eskom over the South African
winter, these had not materialised.
Generating problems in the republic earlier this year helped
push platinum prices to an all-time high.
Goldman meanwhile said it is cutting its full-year forecast
to $1,907 an ounce from $2,107, and its 2009 forecast to $1,963
from $2,300, in response to signs of weaker demand.
In supply news, mining group Xstrata <XTA.L> said it
achieved record platinum output in the first half of 2008.
Spot platinum <XPT=> was little changed at
$1,715.00/1,727.00 an ounce from $1,735.50/1,755.50 late in New
York -- far off a record high of $2,290 hit in March.
Among other precious metals, spot palladium <XPD=> fell to
$369.00/373.00 from $380.00/388.00, having earlier touched a new
5-1/2 month low of $366.50 an ounce, tracking platinum.
Silver <XAG=> tumbled to $16.85/16.89 an ounce from
$17.32/17.38.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
