* Dollar rises as China lending curbs cut risk appetite
* U.S. Fed meeting, GDP data eyed for impact on currencies
* Palladium slips 3.3 pct as investors cash in gains
(Updates prices)
By Jan Harvey
LONDON, Jan 26 (Reuters) - Gold prices slipped below $1,090
an ounce in Europe on Tuesday as China's implementation of a
clampdown on lending lifted the dollar versus the euro,
undermining bullion's appeal as an alternative asset.
Higher-yielding and commodity-related currencies are
sensitive to any hints that China may be putting the brakes on
its economy. []
Spot gold <XAU=> was bid at $1,089.15 an ounce at 1210 GMT,
against $1,097.95 late in New York on Monday. U.S. gold futures
for February delivery <GCG0> on the COMEX division of the New
York Mercantile Exchange fell $6.50 to $1,089.20 an ounce.
"It looks as though gold has found some support here, but I
wouldn't be surprised to see more weakness," said Standard
Chartered analyst Daniel Smith.
"A lot will be determined by the outlook for the dollar, so
clearly the U.S. GDP number on Friday will be very important for
that," he added. "If it is stronger than expected, the dollar
will strengthen and gold will suffer."
The outcome of the Federal Reserve's meeting on interest
rates, due to conclude on Thursday, will also be key for the
U.S. currency, he said. The Fed is not expected to indicate a
benchmark rate hike is imminent. []
Gold prices fell along with the euro on Tuesday as risk
aversion increased, while equities also slipped. China's central
bank told banks that need to raise reserve ratios to implement
the change on Tuesday, banking sources said. []
In addition, Standard & Poor's cut its rating outlook on
Japan, hitting investor confidence about global economic
recovery. European shares fell for a fifth day, while stock
futures pointed to a lower opening on Wall Street. []
COMMODITIES PRESSURED
Gold might typically be expected to benefit at times of
rising risk aversion as investors buy the metal as a haven, as
happened a year ago while the financial crisis raged.
However, if risk aversion is rising but still manageable,
the benefits to the dollar -- strength in which weighs on gold
-- generally puts gold prices under pressure.
"(Gold's) risk-averse qualities were hardly noticeable
during the latest sell-off in equities, with bullion trading
against the dollar as anything else in your average commodity
basket," said VTB Capital analyst Andrey Kryuchenkov in a note.
Among other commodities, oil fell more than 1 percent, and
industrial metals like copper and aluminium also fell. The asset
class is suffering from fears tighter Chinese monetary policy
may curb investment flows into commodities. [] []
On the supply side, the chief executive of Harmony Gold
Mining <HARJ.J>, the world's fifth-largest gold producer, sees
spot gold prices flat for the next 12 months. []
He added the company was reviewing further operations based
on the gold price versus costs after closing four shafts, and
the company's electricity bill could triple in four years if
power utility Eskom's tariff request is granted.
Silver <XAG=> fell to a 2010 low of $16.74, tracking losses
in gold, and was later at $16.78 an ounce versus $17.12.
Platinum <XPT=> was at $1,517 an ounce versus $1,546.50, and
palladium <XPD=> at $426.50 an ounce versus $441.
Buyers cashed in on gains in palladium, the best performer
of the precious metals so far this year, analysts said. However,
"investors may view the correction as a further dip buying
opportunity", said TheBullionDesk.com analyst James Moore.
(Editing by William Hardy)
