NEW YORK/LONDON (REUTERS) -
Gold prices slipped on Monday as investor confidence crumbled in the face of a stronger dollar, lower oil prices and receding inflationary worries.
Analysts predicted that over the longer term, a weakening dollar would boost the precious metal by making gold cheaper for holders of other currencies. But in the short-term, they said, a weak economy would pressure prices.
"There is a general worry that we are going to see a lot of economic weakness, which overall is negative for gold. Gold is still suffering from the potentially lower fabrication demand because of the weak global and the U.S. economies," said Stephen Platt, analyst at Archer Financial Services.
Spot gold was at $740.15 at 2:58 p.m. EST (1958 GMT), down 0.2 percent from Friday's close of $741.05 an ounce.
U.S. gold futures for December delivery settled down 50 cents at $742.00 an ounce on the COMEX division of the New York Mercantile Exchange.
Gold failed to rise even as the dollar slumped after data showed U.S. manufacturing activity weakened and world leaders ended a weekend meeting with few concrete proposals for dealing with global recession.
The dollar is much stronger than it was in July, when it hit record lows against the euro, but many think the U.S. currency will weaken again as the deficit expands from government efforts to rescue the financial sector.
"We are quite bullish for gold in the long term, primarily because we see the dollar weakening substantially on all this liquidity being pumped into the system," said Dan Smith, analyst at Standard Chartered.
STRUGGLE
Gold has slipped since hitting a two-month high of $931 an ounce in early October, and is down nearly 30 percent since hitting a peak at $1,030.80 in March.
Gold's tumble has come as fears about runaway inflation have eased, partly due to falling prices for commodities and liquidation by investors who need liquidity to cover losses on other financial markets.
Inflation fears have retreated as the price of oil has plummeted from a record above $147 a barrel in July. Oil ended $2 lower on Monday at below $55 a barrel.
The auto industry's deteriorating outlook has hit platinum, used to make autocatalysts. Prices for the metal have collapsed by more than 60 percent since a record high of $2,290 an ounce in March.
A report on platinum and palladium markets is due on Tuesday from the world's top platinum refiner, Johnson Matthey .
Platinum fetched $811, down 1.8 percent from Friday's late quote of $833.50, palladium was at $213.50, up 0.7 percent from Friday's finish of $213 and silver was at $9.37, down 1.1 percent from Friday's finish of $9.48.
(Reporting by Frank Tang; Editing by David Gregorio)
