* Bank stocks rally
* Firmer dollar weighs on gold
* Platinum slips to lowest level since early May
(Recasts, adds comment, updates prices, adds detail)
By David Sheppard
LONDON, July 17 (Reuters) - Gold turned lower on Thursday,
giving up early gains after equities rallied and the dollar
firmed, reducing the appeal of the precious metal as an
alternative investment.
Platinum fell to its lowest level since early May with hopes
for stronger supplies out of South Africa weighing on prices.
Spot gold <XAU=> hit a day low of $954.90 an ounce, before
recovering to $961.80/962.80 at 1229 GMT from $963.10/964.10 in
late New York trades on Wednesday. It hit a four-month high of
$987.75 an ounce on Tuesday.
"We've seen a bit of a bounce in the dollar, oil prices are
consolidating while equities are stronger," said Barclays
Capital analyst Suki Cooper. She added, however, that inflation
concerns and ongoing instability in financial markets were
keeping gold well supported.
Bank stocks in the United States and Europe have recovered
over the past couple of days, but analysts say many investors
remain concerned about financial risks.
"The longer-term trend for gold is still intact," said
Merril Lynch analyst Daniel Hynes.
"Prices fell yesterday due to oil and better equity
performance, but there is still a lot of insecurity over the
U.S. banking sector which has driven investors back into gold."
Gold is used as an alternative to stocks during times of
financial uncertainty.
Dollar weakness has been boosting gold recently, as
investors look to hedge against weakness in the U.S. currency.
The dollar firmed on Thursday after banking stocks rallied
in response to better-than-expected results from U.S. bank
JPMorgan. []
A report sovereign wealth funds have been cutting back on
dollar exposure has kept gains in check for the U.S. currency,
which remains within two cents of its all-time low against the
euro. []
Lower oil prices have been pressuring gold in recent
sessions, with crude now more than $13 a barrel of all-time
highs seen last week, reducing the precious metal's appeal as a
hedge against fuel-led inflation.
Platinum fell to its lowest level in over two months after
South African state-owned power utility Eskom [] said it
was confident the country would go through the winter months
without power cuts. []
Energy shortages in the world's number one platinum producer
have boosted prices this year due to concerns mine output would
be constrained.
"We have become somewhat concerned about the short to medium
term view for the platinum group metals," JPMorgan said in a
note. "A pullback towards $1800 an ounce in platinum looks
likely in the medium term, while palladium looks like it could
trade towards $400 an ounce."
Spot-platinum <XPT=> was trading at $1,889.00/1,909.00 from
$1,919.00/1,939.00, having earlier sunk to a low of $1,892.
Sister metal palladium <XPD=> fell to $424.50/$432.50 from
$430.50/438.50.
Silver <XAG=> was steady at 18.71/18.77 from $18.71/18.80.
(Editing by Christopher Johnson)
