LONDON (Reuters) - Gold and platinum tumbled on Wednesday, reflecting a slide across commodity prices, as the dollar firmed to a two-year high against the euro.
Spot gold fell more than 3 percent to a session low of $743.45 an ounce, before recovering to trade at $752.45/754.95 at 1457 GMT. Late in New York on Tuesday it was quoted at $770.10 an ounce.
Gold is caught up in an overall sell-off of commodities, analysts said, with oil, base metals, sugar and grains all trending lower.
"This is quite heavily a dollar story," Stephen Briggs, commodities strategist at RBS Global Banking & Markets, said.
"But in addition, investors are just selling everything. Gold is not immune from that, not least because it is a constituent of most of the indices."
Oil slipped sharply, falling to a 16-month low below $68 a barrel, as traders feared the gloomy outlook for the global economy could translate into lower demand.
The release of U.S. inventory data which showed a fourth consecutive week of gains in crude stocks added pressure to oil, temporarily knocking prices more than $4 to below $68 a barrel.
The market is now awaiting the outcome of Friday's emergency meeting of oil cartel OPEC, which is expected to announce a cut in production quotas. Such a move could boost the oil market, and consequently gold, analysts say.
Gold's other main external driver, the dollar, has strengthened to a two-year high against a basket of currencies, as the dire outlook for the global economy prompted investors to liquidate riskier assets in favor of the currency.
A firmer dollar tends to weigh on gold, as it dents the precious metal's appeal as an alternative investment, and makes it more expensive for holders of other currencies.
PLATINUM TUMBLES
Platinum tumbled more than 6 percent as the stronger dollar added to pressure on the metal, which has been weighed down by fears over falling demand from carmakers.
The automotive sector, which accounts for around half of all platinum demand, has been hit hard by the prospect of recession. A spate of carmakers in the U.S., Europe and Asia have reported falling sales.
A newspaper reported on Wednesday that Toyota Motor Corp's (7203.T: Quote, Profile, Research, Stock Buzz) annual profit will likely halve in the year to next March, while General Motors (GM.N: Quote, Profile, Research, Stock Buzz) was separately reported to be seeking outside investment.
Nissan Motor Corp (7201.T: Quote, Profile, Research, Stock Buzz) said on Tuesday it would cut production in Japan, Britain and Spain in response to falling demand.
Spot platinum slipped as low as $831 an ounce, before recovering to trade at $851.50/871.50, against $885.50 an ounce late in New York on Tuesday.
Its sister metal palladium fared slightly better, slipping to $175/183 from $179.50 an ounce.
"There are still some people out there who think (palladium) has some potential and is cheap," one Germany-based trader said.
"It is easier to try to invest in a $180/oz commodity than in a $860/oz commodity, and probably they think there will be more substitution of platinum by palladium."
Among other precious metals, silver was trading at $9.84/9.94 an ounce against $10.07.
