* Euro recovers from six-month low vs dollar after weak data
* Oil ticks up more than $2 a barrel on tropical storm fears
* Market awaits U.S. data
(Updates prices, adds detail, comment)
By Jan Harvey
LONDON, Aug 26 (Reuters) - Gold recovered in Europe on
Tuesday as rising oil prices lifted the precious metal from
earlier lows, and as the dollar slipped from a six-month high
against the euro.
Gold <XAU=> climbed back up to $823.50/824.50 an ounce at
1346 GMT from $820.20/821.40 an ounce late in New York on
Monday.
"Everything is being led by external factors (such as oil
and currencies)," said VM Group analyst Matthew Turner.
Crude oil prices swung back into the black after earlier
losses to gain more than $2 a barrel, supporting buying of gold
as a hedge against oil-led inflation.
Prices rose as fears grew that tropical storm Gustav could
turn disrupt output in the Gulf of Mexico, seat of a swathe of
key U.S. oil installations. []
The rise in oil pulled gold up from its earlier low of
$806.70, hit after the euro fell over a cent to a six-month low
below $1.46.
The single currency slipped after the German Ifo business
confidence index slumped to its lowest in three years, fanning
speculation a euro zone rate cut may be in the offing.
[]
"We saw a very sharp move this morning in favour of the
dollar, which has accelerated what has been a recent trend in
dollar strength against the euro," Fairfax analyst John Meyer
said.
A stronger dollar against the euro typically pressures gold,
as the metal is often bought as a hedge against weakness in the
U.S. currency.
The dollar later gave up some of those gains, allowing gold
to track oil prices higher.
The precious metal has also taken support in recent sessions
from an upsurge in physical demand for jewellery, coins and
bars. While this is unlikely to counteract the effects of the
strengthening dollar, it is providing some support.
Demand is expected to pick up in the world's biggest gold
market, India, ahead of the Hindi festival of Diwali in October.
Gold traders are now looking to a raft of U.S. data due out
later in the session for clues as to the next direction of the
dollar, and consequently of gold.
U.S. new home sales for July and August consumer confidence
are both due out later in the session. In U.S. trading hours,
the Federal Open Markets Committee will release the minutes of
its Aug. 5 meeting.
Among other precious metals, silver <XAG=> climbed to
$13.62/13.69 an ounce from $13.37/13.43 an ounce late in New
York.
Holdings of the largest silver-backed exchange-traded fund,
New York's iShares Silver Trust <SLV.A>, have risen to a record
6,474 tonnes despite the metal's recent price slide.
"We continue to think that silver prices are extremely
vulnerable to any liquidation from the iShares silver ETF, which
last week increased to a record size," said JP Morgan analyst
Michael Jansen in a note.
"As such we continue to strongly believe that selling
rallies is a very compelling risk/reward trade in silver
especially, and in gold generally."
Platinum and palladium were relatively steady after recently
suffering sharp falls.
Spot platinum <XPT=> was little changed at $1,422/1,442 an
ounce from $1,420/1,440 late in New York, while palladium <XPD=>
was steady at $286/294 an ounce from $285/293 an ounce.
(Reporting by Jan Harvey; editing by Christopher Johnson)
