* Euro slips as Trichet downplays euro zone inflation risks
* Platinum tumbles nearly 5 percent as U.S. car sales fall
(Recasts, updates prices, adds comment)
By Jan Harvey
LONDON, Oct 2 (Reuters) - Gold slipped 2.7 percent to almost
a two-week low on Thursday, tracking a slide in the euro against
the dollar, and as investors sold bullion to cover losses on
other markets.
Platinum tumbled nearly 5 percent to its weakest level since
January 2006, after U.S. carmakers reported a fresh drop in auto
sales in September.
Spot gold <XAU=> was quoted at $851.60/853.60 an ounce at
1416 GMT, against $868.75 an ounce in late New York trade on
Wednesday. Earlier it touched a session low of $845.40, its
weakest level since September 19.
"The major driver here is clearly the dollar," said Wolfgang
Wrzesniok-Rossbach, head of sales at precious metals trading
group Heraeus. Gold moves against the dollar as it is often
bought as a hedge against weakness in the currency.
He said the metal was also losing value because some
investors were liquidating gold holdings to cover losses on
other markets.
"Some would say gold is no longer a safe haven if it reacts
like this at a time of financial crisis," he said. "But in fact
this is a confirmation that it is a safe haven, because people
are now able to liquidate something they have made money on."
Gold is one of the few assets to have gained in value in
recent weeks, when most major equity markets and other
commodities have posted significant losses. It hit a two-month
high of $920 an ounce on Monday after Congress rejected a $700
billion plan to bail out the beleaguered financial sector.
But the firming dollar has put pressure on gold.
The U.S. currency touched a near 13-month high against the
euro after European Central Bank president Jean-Claude Trichet
said inflation risks in the euro zone had diminished.
[]
Traders were awaiting the outcome of a vote by the U.S.
House of Representatives on a rescue plan for U.S. banks that
was approved on Wednesday by the Senate.
Any fresh signs of weakness in the financial system could
boost gold's appeal as a haven from risk.
LOSSES
Other precious metals such as silver, platinum and
palladium, which have more industrial uses, have suffered losses
as traders bet demand will be hit by the global banking crisis.
Platinum prices tumbled as low U.S. auto sales figures
released on Wednesday pressured the white metal.
Spot platinum <XPT=> was quoted at $978.50/998.50 an ounce,
against $1,002 an ounce in late New York trade on Wednesday.
Earlier it touched a session low of $970, its weakest level
since January 2006.
"Motor vehicle sales in the U.S. came out way below
expectations, the lowest since 1993 in terms of a month-on-month
increase," said Standard Bank analyst Walter de Wet.
"When the market is illiquid, it is vulnerable to large
moves," he added. "Combined with that, we have the dollar which
is continuing to strengthen. There is nothing working in favour
of platinum group metals at this stage."
Major carmakers reported plunging U.S. sales for September,
led by a 34 percent slide at Ford Motor Co <F.N>. The escalating
credit crisis is raising fresh doubts as to when the world's
largest car market will stabilise. []
A dip in car sales in the U.S. has raised fears over the
outlook for the entire global automotive industry.
Around half of the world's annual platinum demand comes from
the car industry, which uses the white metal as a component in
autocatalysts.
Among other precious metals, silver <XAG=> slipped to
$11.79/11.87 an ounce from $12.52, tracking gold, while
palladium <XPD=> was little changed at $202.50/212.50 against
$201.50 an ounce.
(Reporting by Jan Harvey; editing by Christopher Johnson)
