* Gold reverses earlier gains as dollar gains vs euro
* Lower crude reduces gold's appeal
(Recasts, adds comment/detail)
By Nick Vinocur
LONDON, June 30 (Reuters) - Gold fell to a one-week low on
Tuesday, dropping sharply as the dollar strengthened broadly and
crude oil prices tumbled, reducing the metal's appeal as an
inflation hedge.
Spot gold <XAU=> was bid at $925.20 by 1520 GMT after
hitting an intra-day low of $922.60, the lowest since June 24.
Earlier it hit a high of $944.70.
The precious metal reversed earlier gains when the dollar
<.DXY>, which has been under pressure, gained against a basket
of currencies after U.S. consumer confidence data. []
"Obviously, in these days where everything is linked
together, from crude prices to the price of gold, any change to
people's view of the economy and inflation expectations will
cause a reaction," said Ole Hansen, an analyst at Standard Bank.
Adding to the bearish signals for gold prices, crude oil
<CLc1> dropped nearly 3 percent. []
While investing in gold is usually seen as a hedge against
risk, a strengthening dollar makes it relatively more expensive
for holders of foreign currencies, weakening its appeal.
"Gold is following the dollar," said senior trader Michael
Kempinski at Commerzbank. "Euro/dollar falling below $1.41
triggered some profit-taking in gold," he said.
Earlier in the London session, gold slipped after the
European Central Bank said gold and gold receivables held by
euro zone central banks fell by 96 million euros ($136 million)
in the week ending June 26. []
INFLATION IN FOCUS?
Matthew Turner, an analyst at VM Group, said gold investors
seemed to be focusing more intently on long-term inflation
expectations than recession fears, which would strengthen the
link between crude and bullion prices.
"But there are no immediate signs of inflation anywhere for
now, so investors are looking to the long term, and of course
when inflation does start to go up, the price of gold will be
rising well ahead of it," he said.
U.S. gold futures for August delivery <GCQ9> dropped by 1.5
percent to $926.90 per ounce on the day.
On the investment front, the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust, said its holdings
remained at 1,125.74 tonnes as of June 29, unchanged since June
25. []
In other precious metals, spot silver <XAG=> was lower at
$13.52 against $13.84 on Monday, platinum <XPT=) fell to
$1,170.00 from $1,182.00 previously, and palladium <XPD=> was
unchanged at $247.00.
(Reporting by Nick Vinocur, additional reporting by Humeyra
Pamuk and Pratima Desai, Editing by Keiron Henderson)
