RTRS: Gold slips as dollar hits 3-week high vs euro
* Dollar rises to 3-week high vs euro on stimulus hopes
* Oil prices climb above $48 but fail to hold gains * Abu Dhabi Dec gold sales fall 40 pct month on month (Updates throughout, changes dateline, pvs TOKYO)
By Jan Harvey
LONDON, Jan 5 (Reuters) - Gold slipped 1 percent in Europe on Monday as a stronger dollar weighed on sentiment with traders eyeing oil market moves on mounting Middle East tensions.
Spot gold was quoted at $865.10/867.10 an ounce at 0925 GMT, down from $873.20 an ounce late in New York on Friday, having touched a session low of $860.20. U.S. gold futures for February delivery GCG9 fell $14.20 to $865.30 an ounce.
"The crucial factor remains the developments in the oil market," said Dresdner Kleinwort consultant Peter Fertig. "Geopolitical tensions are again in the spotlight."
"The dollar has strengthened compared to the levels we saw in mid-December," he added.
The firmer dollar is weighing on prices, with the U.S. currency extending gains against the euro on hopes U.S. president-elect Barack Obama will unveil fresh measures to boost the economy. [ID:nT358074]
Obama is due to meet House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid later in the session to discuss their legislative agendas. [ID:nN04350872]
The euro touched a three-week low against the U.S. currency, which is also benefiting from firmer stock market sentiment and a less hesitant attitude towards risk. [ID:nL5177450]
Gold is often bought as an alternative investment to the dollar and tends to move in the opposite direction to it.
Currency traders will be looking ahead to U.S. construction and vehicle sales data due out later in the session, November durable goods and factory orders data on Tuesday and key U.S. non-farm payrolls numbers on Friday.
The precious metal had found good support in early trade as oil prices rose nearly 3 percent after an Iranian military commander called for an oil boycott over Israel's offensive in the Gaza Strip. [ID:nSP343684]
However, it has slipped as oil gave up those gains.
Gold usually moves in line with oil prices, both because firmer crude boosts interest in the precious metal as a hedge against oil-led inflation and increases the appeal of commodities as an asset class.
JEWELLERY BUYING SOFT
Demand for gold jewllery has been hit by the higher prices. Sales in Abu Dhabi fell 40 percent in December from a month before, the emirate's industry group said. [ID:nL4551125]
Gold buying in India, the world's largest market for the precious metal, has been crimped by higher prices, traders said.
"People would want to buy if prices fall below 12,500 rupees," said Mayank Khemka, managing director of Delhi-based Khemka International. Prices are currently around 13,500 rupees.
Fears over the outlook for the global economy lent powerful support to gold prices towards the end of last year. Gold was one of the only commodities to end the year with a slight gain, as investors flocked to buy the metal as a haven from risk.
Among other precious metals, silver slipped in line with gold to $11.14/11.22 an ounce from $11.52 late on Friday.
Platinum and palladium were steady, awaiting fresh direction from U.S. auto sales figures due out later on Monday. Both have been knocked sharply lower in recent months by fears over falling demand from carmakers, who account for more than half of global consumption of the metals.
Spot platinum eased to $932/937 an ounce from $944, while palladium dipped to $186/191 an ounce from $190.
