* Dollar firms as caution reigns on wider markets
* Oil slides more than 3 pct to below $65 a barrel
* Indian gold, silver demand could by hurt by duty rise-BBA
(Updates prices)
By Jan Harvey
LONDON, July 6 (Reuters) - Gold slid more than 1 percent on
Monday as a stronger dollar dented interest in the metal as an
alternative asset, with investors buying the currency as a safe
store of value amid fears over the economic outlook.
Strength in the U.S. unit kept most dollar-priced
commodities under pressure as it made them more expensive for
holders of other currencies, analysts said.
Spot gold <XAU=> was bid at $921.20 an ounce at 1507 GMT,
against $932.30 an ounce late in New York on Friday.
U.S. gold futures for August delivery <GCQ9> on the COMEX
division of the New York Mercantile Exchange fell $9.70 from
Thursday's close to $921.30 an ounce.
"There is a sell-off with the dollar strength," said
Standard Bank analyst Walter de Wet. "Gold is holding up quite
well, compared to the other commodities. At these levels, we
might see some physical buying."
He said while this may lend support to prices, a break of
the $920-922 level could lead to a retracement back to $900.
The dollar, along with the yen, gained broadly on Monday
amid fears over the economic outlook, which led investors to
shun riskier assets in favour of currencies perceived to be
safe. []
Investor confidence across the market has been subdued since
weaker than expected jobs data from the United States last week.
While gold often benefits from uncertainty in the wider markets,
it is currently taking its cues chiefly from the dollar.
Traders are awaiting fresh direction from the outcome of the
G8 meeting later in the week.
"The market will certainly be cautious ahead of the G8,
(and) that nervousness could further limit the metal in the
range," said Pradeep Unni, senior trader at Richcomm Global
Services.
"It's ideal to be on the selling side, and the slide in oil
prices may keep the prices subdued."
PROSPECTS
Oil fell to below $65 a barrel on Monday, having touched a
five-week low earlier in the session, pressured by doubts over
prospects for a recovery in the global economy and energy
demand. []
Other industrial commodities such as copper and aluminium
also fell. []
Elsewhere, the Bombay Bullion Association said demand for
gold and silver from India, the world's biggest bullion
consumer, is likely to be pressured further this year by an
increase in import duty in the budget for 2009/10.
"As it is, business was bad," said the association's head,
Suresh Hundia. "This will make it worse." Indian gold imports
tailed off last year as prices rose. []
Bargain hunters emerged in India as prices fell on Monday,
but other Asian buyers are awaiting a further price correction,
dealers said. []
Among other precious metals, silver <XAG=> tracked gold
lower, falling to a near nine-week low of $13.00. It was later
at $13.21 an ounce against $13.39.
"Interestingly, the gold to silver ratio surged higher in
the past week, pushing above 69 on Friday," VTB Capital analyst
Andrey Kryuchenkov said in a note.
"Gold prices were almost unchanged in volatile trading last
week. However, silver suffered not only from weakness on the
(platinum) market, but also from a slight increase in risk
aversion and resurfacing economic concerns."
Platinum <XPT=> eased to a low of $1,138.50 an ounce, its
weakest since late May, before recovering to $1,142.00 an ounce
against $1,185.00, while palladium <XPD=> was at $241.50 against
$248.50.
(Additional reporting by Kylie MacLellan, editing by Anthony
Barker)
