* Gold slides 1.5 percent on broader commodities sell-off
* Traders await Fed meeting later this session for direction
* Platinum slips to 6-month low on fears over car demand
(Recasts, updates, changes dateline, PVS SINGAPORE)
By Jan Harvey
LONDON, Aug 5 (Reuters) - Gold slipped 1.5 percent in Europe
on Tuesday as commodities sold off across the board, with oil,
platinum, base metals and grains posting losses on fears over
the bleak economic outlook.
The precious metal's main external drivers also dampened
sentiment, with the dollar rising to a seven-week high against a
basket of currencies, and oil slipping more than $2 a barrel to
a three-month low.
"Commodities generally are being sold off," said Simon
Weeks. "People are liquidating positions, and gold has been
caught up in that."
If the precious metal fails to hold the $880 an level, it is
likely to fall to $855, and maybe to $845, he said.
Gold <XAU=> fell as low as $881.80 an ounce, its weakest
level in nearly six weeks. At 0947 GMT it was at $884.00/885.00,
down from $895.55/896.95 late in New York on Monday.
Physical buying is rebounding as prices ease, helping limit
some losses.
But the dollar rose to a seven-week high against a basket of
currencies on Monday, encouraged by a fall in oil prices, and
ahead of an interest rate decision from the U.S. Federal Reserve
later in the session. []
A firm dollar typically pressures gold, as it dents the
precious metal's appeal as an alternative investment, as well as
making it more expensive for holders of other currencies.
Falling oil prices are also weighing on gold. U.S. crude
futures slipped to a three month low of around $118 a barrel as
traders focused on rising OPEC supply and easing demand in the
United States and Europe. []
Gold prices tend to track movements in the crude market, as
it is often bought as a hedge against oil-led inflation. Weaker
oil prices also undermine sentiment towards commodities as an
asset class.
FED WATCHED
Traders are now looking ahead to the Fed's rate-setting
meeting, a statement from which is due at 1815 GMT. While rates
are expected to stay at 2 percent, analysts say the bank's
accompanying statement will be closely watched. <FEDWATCH>
"The market consensus is expecting the Fed to keep rates on
hold, but the accompanying statement might move markets," said
Dresdner Kleinwort consultant Peter Fertig.
Among other precious metals, platinum and palladium extended
their losses of the last two sessions, with platinum hitting a
fresh six-month low of $1,529 an ounce.
The white metal, chiefly used in the manufacture of
autocatalysts, has now shed around 13 percent in the last week,
while palladium has dipped nearly 10 percent.
Metals have been hit hard by the worsening outlook for the
automotive sector.
A spate of bearish news on Friday, when General Motors,
Nissan and BMW all released disappointing statements and U.S.
car sales slipped to a 16-year low, precipitated a $100 an ounce
slide in platinum prices in that session.
A return of platinum prices to above $2,000 an ounce is
looking "more and more unlikely", said precious metals trading
house Heraeus.
Spot platinum <XPT=> was at $1,532.50/1,552.50 an ounce
against $1,551.00/1,571.00. Spot palladium <XPD=> sank to
$345.00/349.00 an ounce from $349.50/357.50 late in New York.
Silver <XAG=> slid to $16.68/16.73 an ounce from
$17.00/17.05.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
