* Dollar preferred over gold as safe-haven investment
* Oil slides $3 to near $64/barrel on economic worries
* Indian gold, silver demand could by hurt by duty rise
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, July 6 (Reuters) - Gold fell toward $920
an ounce on Monday on the back of a stronger dollar, as
investors preferred the global reserve currency to bullion as a
safe store of value amid fears over the economic outlook.
A flight to quality could still boost gold in the future,
but a lack of imminent inflation signals has been weighing on
the metal's appeal as a hedge.
"At the moment, the safe haven money is more directed into
bonds and the dollar ... and that is because of the low
inflation level," said James Steel, chief commodities analyst
at HSBC in New York.
Gold rose toward $1,000 an ounce in early June because of a
weakening dollar and inflation worries following massive
economy stimulus plans by central banks around the world.
However, lingering deflation worries amid doubts about a
global recovery and a resurgent dollar have since sent the
price of gold back toward $900 an ounce.
Spot gold <XAU=> traded at $923.60 an ounce at 2 p.m. EDT
(1800 GMT), down from $932.30 an ounce late in New York on
Friday.
U.S. August futures <GCQ9> settled down $6.70 at $924.30 an
ounce on the COMEX division of the New York Mercantile
Exchange.
"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."
The dollar, along with the yen, gained broadly on Monday
amid fears over the economic outlook, which led investors to
shun riskier assets in favor of currencies perceived to be
safe. []
Strength in the U.S. unit kept most dollar-priced
commodities under pressure as it made them more expensive for
holders of other currencies.
Investor confidence across the market has been subdued
since weaker-than-expected jobs data from the United States
last week.
Traders are awaiting fresh direction from the outcome of
the G8 meeting later in the week.
OIL DROP DENTS INFLATION HEDGE
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 aluminum
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. []
Among other precious metals, silver <XAG=> tracked gold
lower, falling to a near nine-week low of $13.00. It was at
$13.03 an ounce against its Friday finish of $13.39.
Platinum <XPT=> eased to a low of $1,138.50 an ounce, its
weakest since late May. It was last at $1,143 an ounce against
$1,185.00, while palladium <XPD=> was at $240 against $248.50.
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCQ9> 924.30 -6.70 -0.7 884.30 4.5
US silver <SIU9> 13.238 -0.170 -1.3 11.295 17.2
US platinum <PLV9> 1147.00 -46.30 -3.9 941.50 21.8
US palladium <PAU9> 242.65 -9.35 -3.7 188.70 28.6
Prices at 2:00 p.m. EDT (1800 GMT)
Gold <XAU=> 923.60 -8.70 -0.9 878.200 5.2
Silver <XAG=> 13.23 -0.16 -1.2 11.30 17.1
Platinum <XPT=> 1143.00 -42.00 -3.5 924.50 23.6
Palladium <XPD=> 240.00 -8.50 -3.4 184.50 30.1
Gold Fix <XAUFIX=> 924.50 -8.25 -0.9 836.50 10.5
Silver Fix <XAGFIX=> 13.030 -0.410 -3.1 14.760 -11.7
Platinum Fix <XPTFIX=> 1150.00 0.00 0.0 1529.00 -24.8
Palladium Fix <XPDFIX=> 244.00 0.00 0.0 365.00 -33.2
------------------------------------------------------------
Prices in dollars per ounce.
2008 close for U.S. gold second contract month, U.S. silver and
palladium third contract months and U.S. platinum fourth
contract month.
(Additional reporting by Kylie MacLellan in London; Editing by
Christian Wiessner)
