LONDON (Reuters) - Gold erased its earlier 1 percent gains to trade little changed on Wednesday from the previous session as a further decline in equities sparked selling of commodities and the dollar firmed a touch against the euro.
Silver fell 5 percent, platinum nearly 5 percent and rhodium more than 10 percent as fears over the outlook for the global economy added to the perception demand will fall for industrial precious metals that also have an industrial use.
Spot gold was at $835.80/838.30 an ounce at 1344 GMT, little changed from $835.25 in late New York trade on Tuesday. Earlier it touched a session high of $848.30.
"We have seen an ebbing away of safe-haven flows, and there is some profit taking coming in," said Calyon analyst Robin Bhar.
"The dollar is better bid today as well, and the oil price has fallen further. The whole commodities sector has taken a bit of a knock."
The dollar edged up against the euro, denting gold's appeal as an alternative investment to the currency.
Commodities such as oil, grains, copper and aluminium sold off as concerns over the global economic outlook fanned fears demand will fall.
U.S. stocks fell at the open, mirroring earlier losses in Europe and Asia, as investors feared efforts to ease the credit crisis would not avert a recession.
European shares slipped earlier in the day, breaking a two-day winning streak, as the euphoria over bold government action to arrest the financial sector meltdown dissipated.
Weakness in the equity markets typically benefits gold, as traders move from investment in volatile stocks and shares to so-called 'safer' assets such as bullion.
However, uncertainty surrounding the see-sawing equity markets have led to choppy trading in gold.
Gold was pressured by a softening in the oil price, with crude dipping more than $3 at its lowest point on expectations economic weakness will further cut fuel demand.
Falling crude prices typically weigh on gold, which is often bought as a hedge against oil-led inflation.
PLATINUM, RHODIUM SLIDE
Among other precious metals, spot silver tumbled 5 percent to a session low of $10.15 an ounce, before settling back at $10.29/10.37 an ounce against $10.95.
The platinum group metals also fell, with platinum slipping more than 3 percent and rhodium falling more than 10 percent, as investors worried over the demand outlook.
Rhodium shed $350 an ounce as investors sold the precious metal on fears demand from carmakers would fall, and to raise cash to cover losses on other markets. It was quoted at $2,850 an ounce against $3,200 an ounce on Tuesday.
Auto manufacturers' association ACEA said European new vehicle sales fell 8.2 percent in September, and U.S. car sales have also fallen, recent figures suggest.
"Car sales are looking grim from everywhere, really, and that is the major home for the majority of rhodium," said one British-based trader.
Spot platinum fell to $974/994 an ounce against $1,017.50 late in New York on Tuesday.
The world's largest producer of the white metal, Anglo Platinum told Reuters that it does not plan to trim metal output despite low prices, which it expects to rebound as fundamentals return to the fore.
Spot palladium was quoted at $193.50/201.50 an ounce against $195.
