By Jan Harvey LONDON (Reuters) - Gold tumbled nearly 4 percent on Tuesday as the dollar rallied to a 1-1/2 year high against the euro, denting the precious metal's appeal as an alternative investment, and oil prices slipped $3 a barrel. Spot gold was quoted at $767.00/769.00 an ounce at 1304 GMT, down from $795.00 an ounce late in New York on XMonday. Earlier it touched a session low of $764.20. After several weeks of buffeting by equity markets, which have dictated interest in gold as a haven from risk, the precious metal is now returning to its usual two external influences, the dollar and crude oil, say analysts. "The market is more focused on euro/dollar again," said Commerzbank senior trader Michael Kempinski. "The stock market has made back some of its losses so safe-haven buying is over for the time being." The dollar rebounded to a 1-1/2 year high against the euro, as investors were cheered by Federal Reserve Chairman Ben Bernanke's testimony to Congress on Monday, during which he endorsed more government spending to stimulate the U.S. economy. The currency's recovery has been fuelled by demand from banks for funding, and as investors unload highly leveraged positions. "Prices (are) moving in response to dollar and oil price moves, although a number of participants are envisaging continued weakness due to deflationary pressures," noted John Meyer, an analyst at Fairfax. Fears over demand are weighing on all industrial commodities, with prices of oil and copper around 50 percent below their all-time highs. If commodity prices fall it is likely to dent demand for gold as an inflation hedge. Oil slid around $3 a barrel on Tuesday, pressured by expectations a global recession will cut demand for oil. Crude had benefitted on Monday from expectations that oil cartel OPEC will cut production at its emergency meeting in Vienna on Friday. It has already suggested it is in favour of a cut to boost oil prices, which have halved from the high of $147.27 a barrel in July. "If (OPEC) decides to go ahead and cut production, that should boost the oil market and could help precious metals," said Afshin Nabavi, head of trading at MKS Finance in Geneva. Physical interest in gold remains supportive, however. The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings remain near record levels, despite a small outflow on Monday. Buying of coins, bars and jewellery is also firm. "Physical demand is very strong, particularly out of the Far East. For the last couple of days, it has been remarkable," said Nabavi. "This is providing some good support at lower levels." Among other precious metals, platinum and palladium were little changed as traders took a breather after last week's heavy losses and Monday's recovery. North American Palladium said on Tuesday it is temporarily closing its Lac des Iles mine due to falling metals prices, but said it believes the mid-term outlook for platinum and palladium is "quite positive". The company produces around 4 percent of the world's palladium, it said. Spot platinum was trading at $871/891 an ounce against $893 an ounce on Monday, while palladium was at $178/186 an ounce against $178.50. Silver was steady at $9.74/9.82 an ounce from $9.75.

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