* Gold falls 2 percent, platinum slips 5 percent
* Oil, industrial metals, coffee and cocoa slide
* European shares fall 6 percent, pare losses
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 16 (Reuters) - Gold slipped more than 2 percent
in Europe on Thursday and platinum, palladium and silver tumbled
as losses in equities sparked further selling of commodities.
Crude oil, copper, aluminium and soft commodities such as
coffee and cocoa all slipped, while the U.S. dollar firmed as
investors sold out of riskier assets in favour of the currency.
Spot gold <XAU=> was quoted at $835.55/838.05 an ounce at
0955 GMT, down from $848.00 in late New York trade on Wednesday.
Earlier it touched a session low of $827.85.
"Markets generally are just selling off. It is that, as much
as anything else, that gold is being caught up in," said Stephen
Briggs, an analyst at RBS Global Banking & Markets. "People need
to liquidate assets to cover losses elsewhere."
European shares tumbled at the open, shedding more than 6
percent at one point. Although they later came off lows, the
fall sparked a sell-off of commodities as investors fretted over
the prospect of recession. []
Asian stocks plummeted overnight, led by an 11 percent drop
in Tokyo's Nikkei.
The dollar strengthened, however, as risk-averse investors
sought the safety of the U.S. currency. The euro remained weak
as worries over the euro zone economy grew after fresh signs of
weakness in neighbouring countries.
A firmer dollar typically weighs on gold, which is often
bought as an alternative investment to the U.S. currency. Weaker
oil prices, which tumbled more than $2, are also undermining
gold's appeal as an inflation hedge. []
Traders are now awaiting fresh moves from governments and
central banks to address the credit crisis and stabilise the
volatile financial markets.
"The gold market is watching for the next move by
authorities to unlock liquidity," said Standard Bank analyst
Walter de Wet.
"While recent measures should have an effect eventually, it
might be too late, as with every passing day, the real economy
suffers more."
Traders say they expect more rate cuts from the U.S. Federal
Reserve. While in the long term any economic stimulation is
likely to pressure gold, analysts say in the short run it would
boost the appeal of non-interest bearing assets like bullion.
STRONG INTEREST
Briggs at RBS said there is a major contrast between strong
buying interest in the physical market -- for coins, bars, and
physically backed exchange-traded funds -- and selling of gold
futures by investors keen to cover losses in other markets.
"The paper market and the physical markets are pulling in
opposite directions," he said
Among other precious metals, silver tracked gold lower to
$9.95/10.03 an ounce from $10.23 late in New York on Wednesday.
Platinum plummeted and palladium slipped as investors feared
a recession could cut demand for the metals, primarily used in
catalytic converters. Rhodium, which has similar applications
and tumbled more than 20 percent on Wednesday, also fell.
Investec downgraded its price forecasts for the platinum
group metals, citing poor demand among other factors. It slashed
its platinum forecasts by 14 percent in 2008 and 32 percent in
2009, to $1,629 an ounce and $1,350 an ounce respectively.
It cut its 2008 rhodium forecast by 19 percent to $7,123 and
its 2009 forecast by a quarter to $5,625. It also said it now
sees palladium at $368 this year and $318 in 2009, having
downgraded its forecasts 9 percent and 21 percent respectively
Spot platinum <XPT=> slipped to $906/926 an ounce from $955
late in New York on Wednesday, while palladium fell to $183/191
from $189.
Rhodium <RHO-LON> slipped further to trade at $2,300 an
ounce against $2,450 on Wednesday.
(Reporting by Jan Harvey; editing by Michael Roddy)
