* Dollar rises as fears over China knock risk appetite
* U.S. Fed meeting, GDP data eyed for impact on currencies
* Platinum, palladium, silver all slide in gold's wake
(Updates prices, adds comment)
By Jan Harvey
LONDON, Jan 26 (Reuters) - Gold slipped more than 1 percent
on Tuesday as the dollar rose versus the euro after China
implemented a planned increase in required reserves for some
banks, denting interest in the metal as an alternative asset.
Silver, platinum and palladium all also fell more than 3
percent, with silver hitting a near three-month low, as other
precious metals followed gold lower.
Spot gold <XAU=> hit a session low of $1,085.40 an ounce,
but had recovered to $1,094.95 an ounce by 1507 GMT against
$1,097.95 late in New York on Monday. COMEX gold futures for
February delivery <GCG0> fell $2.70 to $1,093.
"This is definitely currency-driven," said Saxo Bank senior
manager Ole Hansen. "There is a bit of a return to risk aversion
currently, and that is bringing many of these commodities back
to earth."
The dollar rose early on Tuesday after China implemented a
planned increase in required reserves for some banks, and hit a
session high versus the euro after weaker-than-expected U.S.
home prices data dented risk appetite. []
The news from China weighed on global stock markets, as
traders worried the Asian nation may take further steps to cool
its blistering economic growth, thus sapping investor confidence
about a global economic recovery. []
Traders are eyeing the outcome of the Federal Reserve's
meeting on interest rates, due to conclude on Thursday, for its
influence on the dollar. The Fed is not expected to indicate a
benchmark rate hike is imminent. []
Standard Chartered analyst Daniel Smith said much will also
depend on Friday's U.S. GDP data. "If it is stronger than
expected, the dollar will strengthen and gold will suffer," he
said.
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 slid. 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 low of $16.29, its weakest since the
beginning of November, tracking losses in gold. It was later at
$16.54 an ounce versus $17.12.
Platinum <XPT=> hit a low of $1,497 and was later at $1,513
an ounce versus $1,546.50, and palladium <XPD=> was at $425.50
an ounce versus $441, having earlier touched a low of $421.
"We expect platinum group metals to outperform gold and
silver this year given the considerably brighter demand outlook
for both platinum and palladium as restocking emerges across the
auto and industrial sector," Barclays Capital said in a note.
"The robust investment demand is set to add to this positive
outlook," it added.
(Editing by Anthony Barker)
