* Oil down trend this week dragging on market
* Weak equities bring gold off session lows
* Platinum reaches 11-week low as supply fears ease
(Recasts, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, July 18 (Reuters) - Gold eased on Friday as the
market responded to this week's big fall in oil prices and a
rise in the dollar against the euro, denting bullion's appeal as
a currency hedge.
However, gold recovered from lows as weakness on the equity
markets burnished its appeal as a haven from risk.
Gold <XAU=> eased to $960.60/961.60 an ounce at 0916 GMT
from $962.10/963.10 an ounce late in New York on Thursday,
having earlier slipped as low as $954.50 an ounce.
"Oil prices fell by more than 10 percent in just a couple of
days, and that was just so great that it hasn't really been
priced into gold (yet)," said Commerzbank analyst Eugen
Weinberg.
Oil has ticked up on Friday, but remain some 11.5 percent
below the record high of $147.27 a barrel they reached at the
end of last week. []
Gold typically moves in line with crude, as it can be bought
as a hedge against oil-led inflation. Weakness in the oil price
also tends to dampen interest in commodities as a whole.
The other main external driver of gold, the dollar, also
pressured gold as it held onto gains made on Thursday against
the euro. []
Dollar strength pressures gold, as the precious metal is
bought as a hedge against currency weakness.
WEAK EQUITIES SUPPORT
However, persistent weakness on the equity markets has
helped gold recover from the lows it struck earlier in the
session.
European shares slipped in early trade as banks fell after
lacklustre results from Merrill Lynch <MER.N>, while oil stocks
lost ground after the dip in crude prices. []
"In recent days one of the most important reasons for gold
price to rise was outflows from the equity markets, as the money
is reallocated into gold," said Weinberg.
"I expect the negative correlation between the equity
markets and gold to continue."
Elsewhere spot platinum <XPT=> fell to $1,863.00/1,883.00 an
ounce from $1,881.00/1,901.00 late in New York on Thursday,
having hit an intraday low of $1,845 an ounce, its weakest level
since May 2.
The metal has been pressured by news that a power shortage
in South Africa -- the key factor that sent platinum to an
all-time high of $2,290 an ounce earlier this year -- is
unlikely to result in further powercuts this year.
[]
The metal, which is widely used in autocatalysts, had
already been suffering this week from fears a U.S. slowdown
could impact car demand.
"Speculation of a slowdown in U.S. vehicle demand and a
build-up in China's stockpile of unsold new vehicles have
elevated fears of an industrial demand slowdown for platinum,"
said Standard Bank analyst Manqoba Madinane.
Auto industry demand accounts for 60 percent of total
platinum consumption.
Among other precious metals, spot palladium <XPD=> was
steady at $421.00/426.00 an ounce from $420.00/428.00 an ounce,
while silver <XAG=> rose to $18.55/18.61 an ounce from
$18.39/18.48 late in New York.
(Reporting by Jan Harvey; editing by Christopher Johnson)
