RTRS: Gold dips as risk appetite firms but oil supports
* Dollar firms half a percent against the euro * Firmer equities show fresh appetite for risk
* Oil climbs $1 a barrel after China opts to cut rates (Recasts; adds comment; changes dateline pvs SINGAPORE) By Jan Harvey
LONDON, Nov 26 (Reuters) - Gold edged lower in Europe on Wednesday as the dollar firmed and a sharper appetite for risk redirected investment to the equity markets, though rising oil prices lent support to the precious metal.
Dealers are awaiting a raft of U.S. data due later in the session and a European Commission announcement on plans to stimulate the economy for clues to the next direction of trade.
Spot gold was at $814.35/816.35 an ounce at 1055 GMT, against $819.85 an ounce late in New York on Tuesday.
"It is surprising that gold is not stronger, given higher oil prices," said Commerzbank analyst Eugen Weinberg.
"That is probably due to the fact that some risk aversion is coming out of the market, due to the new rescue package in the U.S. and the higher equity markets. These are probably pointing to some weaker demand for safe-haven gold."
European shares turned positive in early trade on Wednesday after UK gross domestic product (GDP) data met expectations, and helped by news of an interest rate cut by China. [ID:nLQ651603]
The dollar, the main external driver of gold, firmed half a percent against the euro in early trade. [ID:nLQ510619]
A stronger dollar tends to pressure gold, which is often bought as an alternative investment to the U.S. currency.
Oil climbed more than $1 a barrel, recovering from a near 7 percent decline on Tuesday. China's decision to cut interest rates by 1.08 percent boosted hopes a prolonged slowdown in oil demand can be avoided. [ID:nSP373462]
Firmer crude prices increase interest in commodities as an asset class, and tend to boost gold's appeal as a hedge against oil-led inflation.
Traders are awaiting the release of U.S. oil inventories data later in the session for clues as to the next direction for the market, analysts said.
FESTIVE DEMAND
Investors are also turning their attention to the outlook for physical gold demand from jewellers as the festive season gets underway.
Gold demand India, in the world's biggest bullion market, remains lacklustre as prices stay high, dealers said, while analysts said the impact of the credit crunch on consumer spending could keep gold sales low elsewhere.
"Seasonally there is demand for the Christmas and New Year celebrations, although in light of the global economic slowdown we would expect jewellery sales to be more subdued this time," Fairfax analyst John Meyer said.
Among other precious metals, spot silver was at $10.28/10.36 an ounce against $10.29.
Spot platinum was little changed at $863/873 an ounce from $860 late in New York on Tuesday. Sister metal palladium was at $192.50/200.50 an ounce against $194.50.
Both metals have slipped dramatically from the highs they hit earlier in the year, pressured by concern over the dire outlook for carmakers, the major consumer of the metals, which are used in catalytic converters.
Toyota Motor Corp <7203.T> had its top-notch credit ratings cut by Fitch Ratings for the first time in a decade on Wednesday on fears the global slowdown will hit the car industry hard. [ID:nT14411]
"The negative developments in the industry are so substantial and fundamental that even the strongest player -- Toyota -- can no longer support the 'AAA' rating," said Fitch director Tatsuya Mizuno. (Reporting by Jan Harvey; editing by Karen Foster)
