* Gold slides nearly 2 pct on weak oil, strong dollar
* Platinum slides to its lowest level since end-2006
* Markets await U.S. Federal Reserve decision
(Recasts, adds comment, changes dateline, pvs Tokyo)
By Agnieszka Flak
LONDON, Sept 16 (Reuters) - Gold fell nearly 2 percent on
Tuesday alongside a sharp drop in oil as the dollar firmed ahead
of a decision on interest rates by the U.S. Federal Reserve.
Platinum slipped more than 5 percent to its lowest level
since the end of 2006 as the escalating credit crisis reinforced
fears that global economic slowdown could further hit demand
from auto makers.
Although gold normally gains on safe-haven buying during
financial crises, portfolio managers have been selling assets
across the board after U.S. investment bank Lehman Brothers
<LEH.N> filed for bankruptcy. []
As of 0920 GMT, spot gold <XAU=> fell 1.2 percent to $776.90
an ounce from a session low of $771.55 from Monday's close of
$786.20. Earlier it touched a one-week high of $786.95.
Robin Bhar, analyst at Calyon, said oil and the dollar were
weighing on gold.
"Although gold might be struggling in the short term, the
longer this goes on, it should be positive," he said.
"You might see more people coming into the market on the
long side looking to buy gold if financial conditions continue
to deteriorate."
Precious metals were undermined on selling led by Asian
investors returning from a three-day weekend.
Markets will closely watch the outcome of the Federal
Reserve's meeting later in the day. Speculation of a rate cut
is growing to help ease tensions in financial markets.
Investors and analysts will also scrutinise the Fed's
statement on the outlook for growth in the United States.
"Prices will be driven by this whole commodities panic --
the economic outlook will be the key driver today," said
Standard Chartered analyst Daniel Smith.
OIL DOWN
The dollar slid to a two-month low versus a broadly rallying
yen as a wave of risk aversion sparked by the collapse of Lehman
Brothers rippled across markets. []
Crude oil prices slipped nearly $3 to a seven-month low as
the escalating credit crisis reinforced fears that global
economic weakness could further depress energy demand. []
The most active December contract on COMEX was trading down
$8.0 or 1 percent at $779.0 from the New York settlement.
The benchmark August 2009 gold contract on the Tokyo
Commodity Exchange was down 9 yen or 0.3 percent at 2,609 yen
per gram from Friday's close.
"Investors are cutting their risk positions as uncertainties
are increasing with share prices falling and also crude prices
quickly plunging to near $90," said Shuji Sugata, a manager at
Mitsubishi Corp Futures and Securities in Tokyo.
"Some bargain-hunting could emerge as gold is still slightly
more supported than other commodities, but you simply cannot
build new buy positions aggressively from here," Sugata said.
Spot platinum <XPT=> dropped to $1,099 an ounce, the lowest
since December 2006, and was last quoted at $1,099/1,129 an
ounce from Monday's $1,164.50.
Platinum, mainly used in autocatalysts, has been hit by
heavy selling due to a slowing U.S. economy and poor car sales
in the United States, Japan and China. It struck a record high
of $2,290 an ounce in March.
Spot palladium <XPD=> tumbled more than 5 percent, falling
in line with platinum to trade 4.3 percent lower at $221.50 an
ounce.
Spot silver <XAG=> was trading 1.8 percent lower at $10.88
an ounce, from Monday's close of $11.08.
(Editing by Michael Roddy)
