LONDON (Reuters) - Gold recovered early losses in Europe on Tuesday, tracking moves in the equity markets, with a firmer dollar versus the euro limiting gains in the precious metal.
Bullion was lower in Asian trade, giving up some of the 2 percent gains it made on Monday, as world stocks slipped from a three-week high and the dollar strengthened.
But the precious metal swung higher as equities recovered in Europe. Spot gold "Gold is getting caught up in equity-related news and economic news," said Simon Weeks, director of precious metals at the Bank of Nova Scotia. "When people with baskets of commodities are looking for cash, gold gets caught up in that liquidation."
However, the strength in the dollar -- which posted hefty losses on Monday -- against the euro is keeping up the pressure on gold. The precious metal is often bought as an alternative investment to the U.S. currency and moves in the opposite direction to it.
The dollar rose versus the euro as risk appetite ebbed. Investors are cautious over the outlook for the equity markets and fear weakness in the global economy could be sustained.
The other main external driver of gold, the price of oil, was also steady on Tuesday at just under $44 a barrel.
The market is awaiting a demand report from the U.S. energy department later in the session and the production meeting next week of the Organisation of the Petroleum Exporting Countries (OPEC) for signs of the next direction of trade.
Rising crude prices can boost confidence in commodities as an asset class, and increase interest in gold as a hedge against oil-led inflation.
On the physical side, jewellery buying in the world's main bullion market, India, has been picking up during the wedding season, and is also benefiting from demand for gold as a haven from risk, dealers said.
"India is buying," said Beh Hsia Wah, a dealer at United Overseas Bank in Singapore. "Most customers expect that gold might hit $860."
PLATINUM WILTS
Among the other precious metals, platinum and palladium slipped a touch as investors worried slowing economic activity would hit demand for the metals, which are chiefly used to make catalytic converters.
Economic news was weak on Tuesday. Data showed Japan's economy contracted at a faster pace than anticipated in the third quarter, Germany's trade deficit grew in October, and the French trade deficit widened to a record in the same month.
British industrial output fell at its sharpest pace in nearly six years in October, and the third-quarter economic contraction could be sharper than first thought.
A survey from the Organisation for Economic Coperationa and Development (OECD) said the U.S. economy will probably get worse before it gets better. Weekly retail sales and chain store sales data are due in the United States later in the session.
Spot platinum eased to $811/831 an ounce from $821 late in New York on Monday, while palladium slipped to $170/175 an ounce from $173.
"With Japanese GDP sliding deeper in the red and markets anticipating poor... U.S. economic sentiment data, platinum could come under pressure today," said Standard Bank analyst Walter de Wet.
Spot silver was quoted at $10.02/10.10 an ounce against $9.95.
