(Refiles, fixes typo in headline)
* Oil's sharp fall weighs heavily on gold
* Market fears, initial dollar weakness support gold early
* Platinum at lowest level since early May
(Recasts, updates prices, market activity to New York close;
adds second byline, dateline, previously LONDON)
By Frank Tang and David Sheppard
NEW YORK/LONDON, July 17 (Reuters) - Gold ended a volatile
session lower on Thursday as heavy losses in crude oil hit
bullion's inflation appeal and as global stock markets rose on
signs of financial stability.
Spot gold <XAU=> was at $962.10/963.10 an ounce by New
York's last quote at 2:15 p.m. EDT (1815 GMT), against
$963.10/964.10 late in New York on Wednesday. It had traded as
high as $978.25.
"Crude breaks, stocks rally and we are starting to lose a
little luster in gold," said Frank McGhee, head precious metals
trader at Integrated Brokerage Services in Chicago.
McGhee said gold's rally last week was driven largely by
fears in financial markets, but those worries seemed to have
disappeared.
"If the dollar starts firming on the stock rally, then the
gold will take a fairly significant letdown," McGhee said.
On Tuesday, gold hit a four-month high of $987.75 an ounce
after rallying as investors concerned about the stability of
the U.S. financial system sought a safe haven for funds.
"Gold's mainly been tracking oil and the dollar today,
having risen largely on banking concerns over the past week,"
said Standard Chartered trader Tony Dobra.
Gold fell as the dollar erased early losses versus the
euro. Gold tends to trade opposite the dollar and in line with
oil, as it serves as an alternative asset to the U.S. currency
and a hedge against oil-led inflation.
Bank stocks in the United States and Europe recovered over
the past couple of days, but analysts say many investors remain
concerned about financial risks, underpinning gold.
BULL TREND INTACT
The longer-term trend for gold remained bullish as long as
the dollar shows no signs of bottoming and investor demand
keeps rising, said Mark Hansen, director of trading at CPM
Group in New York.
U.S. gold futures for August delivery <GCQ8> settled up
$8.00 at $970.70 an ounce on the COMEX division of New York
Mercantile Exchange.
Platinum fell to its lowest level since early May 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 No. 1 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 $1,800 an ounce in platinum
looks likely in the medium term, while palladium looks like it
could trade towards $400 an ounce."
Spot-platinum <XPT=> hit a two-month low of $1,877.50 an
ounce, before recovering slightly to trade at
$1,881.00/1,901.00 from $1,913.50/1,933.50 late in New York on
Wednesday.
Sister metal palladium <XPD=> fell to $420.00/$428.00 from
$430.50/438.50 its Wednesday U.S. close.
Silver <XAG=> was down at $18.42/18.50 from its previous
finish of $18.71/18.80.
(Editing by David Gregorio)
