LONDON, Nov 11 (Reuters) - Gold dipped in Europe on Tuesday, as a downturn in the stock markets and commodities such as oil and industrial metals weighed on prices.
However, the softer dollar helped to limit losses.
Prices are likely to consolidate in the short term, analysts said, with the market eyeing the outcome of this weekend's G20 summit in Washington, where world leaders will discuss the financial crisis.
Spot gold was at $739.50/741.50 an ounce at 1053 GMT, little changed from $745.75 late in New York on Monday, when it rose as much as 3 percent.
"Gold (climbed) yesterday on the back of everything else, but those supportive factors have turned negative," said Simon Weeks, head of precious metals at the Bank of Nova Scotia.
"Oil came down, stock markets came down, commodities came down, and gold came with them," he added. "But overall, we expect it to outperform everything else in the longer term."
Oil and industrial metals prices slipped, with U.S. crude futures falling over $2 a barrel to erase the previous session's gains. [ID:nSP153589]
The softer dollar is lending some support to gold, which is often bought as an alternative investment to the U.S. currency and tends to move in the opposite direction to it.
The euro rose against the dollar after data from the ZEW Institute showed an improvement in German economic sentiment, although a slip in European shares is keeping a lid on gains. [ID:nLB176429]
The FTSEurofirst 300 extended losses, tracking falls in Asia and on Wall Street, with fears over the prospect of a global recession outweighing the optimism sparked by a near $600 billion stimulus package announced by China last weekend.
"Uncertainty remains, blocking investment fund flows into precious metals and resulting in many investors opting for the sidelines," said Standard Bank analyst Walter de Wet.
INDIAN DEMAND FIRM
Physical demand for the precious metals remains firm, traders say. India's gold demand moved higher as retail buyers bought for the wedding season, which began earlier this month. [ID:nBOM416824]
"On a scale of one to ten, based on what we are seeing or can observe, we would place current jewellery demand at a 6 or 7, not a bad score considering the weakness in the global economy," said UBS analyst John Reade in a note.
Platinum prices slipped a touch after climbing on Monday as traders hoped the Chinese stimulus package could lead to a recovery in demand for the more industrial precious metals.
Platinum and palladium prices have tumbled in recent months as traders fretted over the outlook for demand from carmakers, who consume around half of the world's platinum group metals.
Stillwater Mining said on Monday its full-year 2008 production is likely to be still lower than its most recent forecast of 515,000-525,000 ounces, which it had already cut from an initial estimate of 550,000-565,000. [ID:nIFXbb2296]
The company said due to falling metals prices it recognises it needs to adjust its operations to conserve cash. Stillwater, a unit of Russia's Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz), is the only significant producer of PGMs outside South Africa and Russia.
Spot platinum was quoted at $831/851 an ounce, down from $847 late in New York on Monday. Palladium was at $218/226 an ounce from $.
Among other precious metals, silver slipped to $9.98/10.06 an ounce from $10.18.
