* Caution sparks fresh dollar buying, weighing on gold
* Silver hits near-10 week low on dollar, economic outlook
(Updates prices)
By Jan Harvey
LONDON, July 10 (Reuters) - Gold slipped on Friday as the
firmer dollar and weaker oil pressured prices, but losses were
limited as physical buying curbed the metal's slide.
Gold has declined 2 percent so far this week as the dollar
strengthened, weighing on commodities. However, it is holding
above a two-month low of $904.70 hit on Wednesday.
Spot gold <XAU=> was bid at $908.60 an ounce at 1122 GMT,
against $911.45 an ounce late in New York on Thursday. U.S. gold
futures for August delivery <GCQ9> on the COMEX division of the
New York Mercantile Exchange fell $7.40 to $908.80 an ounce.
Gerry Schubert, head of precious metals at INTL Commodities,
said consistent buying had emerged from Asia and the Middle East
with prices below $910 an ounce, while sales to Turkey were also
picking up.
"This is supportive, but it wouldn't hold a massive long
liquidation," he said. "It looks like with lower oil prices you
would expect some more liquidation."
"Unless something further comes out of the G8 (summit), I
expect further long liquidation next week," he added. "A fall
would be (limited) by physical buying, but I think if $902 fails
to hold, $875 would be the next stop we would be looking for."
Gold has come under pressure from the firmer dollar, which
makes the metal more expensive for holders of other currencies
and dents its appeal as an alternative asset.
The dollar <.DXY> climbed against a basket of currencies as
weaker equity markets and caution ahead of the U.S. corporate
earnings season boosted interest in the currency as a haven from
risk. [] []
Other commodities also weakened. Oil, widely seen as the
bellwether of the asset class, slipped towards $60 a barrel on
Friday as economic pessimism deepened and traders worried about
new rules to curb speculation. []
SAFE STORE
While physical demand for gold is picking up, activity
remains relatively quiet compared to the heavy buying seen at
the beginning of the year.
Buying in India, the world's largest bullion consumer, was
light as dealers awaited further price falls, while holdings of
the SPDR Gold Trust, the world's largest gold exchange-traded
fund, were unchanged on Thursday. [] []
A more positive outlook for the economy and the wider
markets since the beginning of the year has reduced buying of
precious metals-backed ETFs as a safe store of value, previously
a major support of prices.
Elsewhere, silver <XAG=> slipped to a near ten-week low,
pressured by strength in the dollar and reflecting losses in
industrial metals such as copper on the weaker economic outlook.
Silver touched a low of $12.59 an ounce, its weakest level
since May 4, and was at $12.63 an ounce against $12.82. The
metal often mirrors moves in gold, but being a smaller market,
outperforms them.
"We expect more silver than gold selling in the current
environment," said Standard Bank in a note. "Silver support is
at $12.60 and $12.56, with resistance at $12.83 and $13.00."
Among other precious metals, platinum <XPT=> was at
$1,094.50 an ounce against $1,105, while palladium <XPD=> was at
$234.50 against $233.
In South Africa, the major producer of the platinum group
metals, miner Eastern Platinum <ELR.TO> said 500 workers at its
Crocodile River mine had been holding seven supervisors hostage
underground since Thursday. []
(Reporting by Jan Harvey; Editing by Anthony Barker)
