* Gold tumbles as oil slides, dollar firms
* Bullion weakened as stocks recover from initial losses
* Platinum up on fresh power problems in South Africa
(Recasts, updates with quote, closing prices, market activity,
adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, July 22 (Reuters) - Gold finished sharply
lower after a volatile session on Tuesday as a combination of
retreating oil, a higher dollar and recovering U.S. stocks
pulled the precious metal from its earlier highs.
Spot gold <XAU=> was at $948.30/949.90 an ounce by New
York's last quote at 2:15 p.m. EDT (1815 GMT), down from
$961.75/963.15 an ounce late in New York on Monday.
Its session low was $943.70, which marked the weakest level
since July 11, with a wide trading range of more than $30.
Oil fell as much as $5 a barrel to a six-week low as a
tropical storm moving over the Gulf of Mexico was expected to
miss most major oil and gas installations. []
"Clearly, gold's weakness has to do with oil prices. I
think the market was caught very long as people were trying to
push gold through $975 and possibly $1,000," said Bruce Dunn,
vice president of trading at Auramet Trading in New Jersey.
Dunn also cited weak physical gold demand from India and
the Middle East due to high prices and hawkish comments from a
Federal Reserve official.
Philadelphia Fed President Charles Plosser said on Tuesday
rising inflation could force the Fed to start raising interest
rates. Plosser is a voting member of the Fed's policy-setting
committee. [].
""We're still in a upward channel but I think $940 gold is
critical to hold support," Dunn said.
U.S. gold futures for August delivery <GCQ8> settled down
$15.20, or 1.6 percent, at $948.50 an ounce on the COMEX
division of New York Mercantile Exchange.
The dollar rallied sharply, helped by a steep drop in U.S.
crude futures and comments from Plosser suggesting that U.S.
interest rates may have to rise before financial markets
recover. []
Rising fears over the economic outlook and volatility in
the equity markets were key factors in pushing gold to a 4-1/2
month high of $987.75 last week.
Bullion holdings in gold-backed, exchange-traded funds
(ETFs) reported a net inflow of five tonnes in the second
quarter, bringing the total to 948 tonnes, industry-sponsored
World Gold Council said in a report. []
ETF DEMAND FIRM
Investment interest in the precious metals is firm, with
holdings of the SPDR Gold Trust <GLD.P><GLD.A> in New York --
the largest gold-backed exchange-traded fund -- rising to
705.59 tonnes on Monday, close to a record high.
Silver holdings of the United States' largest silver-backed
ETF, iShares Silver Trust, were also at a record 6,092.31
tonnes on July 16, the last day for which holdings were
published.
Among other precious metals, platinum ended lower after
initially rising more than 2 percent to a session high of
$1,880 an ounce, as South African power utility Eskom reported
a further electricity outage.
South Africa is the world's largest producer of platinum.
Eskom said it has shut down one of two electricity
generating units at its Koeberg nuclear power plant after a
technical fault. []
Platinum group Johnson Matthey said in its first-half
earnings report that it had seen strong growth in autocatalyst
sales in Asia, though it added sales have dropped in North
America.
Autocatalyst manufacturing is a key use of platinum and
fears over future demand, notably in the United States, put
platinum prices under pressure recently.
Spot platinum was at $1,798.50/1,818.50 an ounce against
$1,837/1,857 in New York, recovering from an 11-week low of
$1,825.50 it hit earlier in the session.
Silver <XAG=> was at $17.93/18.00 an ounce, sharply lower
than $18.35/18.43 late in New York. Spot palladium <XPD=> was
at $402.50/410.50 an ounce from $410.50/418.50 late in New
York.
(Editing by Christian Wiessner)
