Gold cuts loss as dollar slips, oil weighs

By Jan Harvey and Carole Vaporean

LONDON/NEW YORK (Reuters) - Gold prices slipped along with oil on Monday in response to a rising dollar, but the yellow metal later trimmed those declines when the U.S. currency erased its gains on the euro, traders said.

The dollar retreated when U.S. equity markets extended their losses, amid falling energy shares and renewed credit market concerns, dollar traders said.

Gold pulled off early lows to $925.20/926.80 an ounce by 4:00 p.m. EDT though was still lower than $932.00/933.00 an ounce in London on Friday, when U.S. markets were closed for Independence Day holiday.

Earlier, it touched a session low of $914.50 an ounce, nearly 2 percent below the level it traded at on Friday.

"The euro is a bit weaker, the dollar is stronger and oil is slipping a bit," said Commerzbank analyst Eugen Weinberg.

"There has been a strong negative correlation between the gold price and the equity markets. Risk aversion has led to an inflow into gold, so higher equity markets could see a lower gold price."

A falling dollar typically aides gold, which is bought as an alternative investment to the U.S. currency. A weaker greenback also makes dollar-priced commodities such as precious metals less expensive for holders of other currencies.

In New York, the August gold contract finished $4.80 lower at $928.80 an ounce on the COMEX division of New York Mercantile Exchange after falling as low as $916.30.