Gold ends 2 pct lower on firm dollar, oil slide

By Frank Tang and Karl Plume

NEW YORK/LONDON (Reuters) - Spot gold ended 2 percent lower on Tuesday at the lowest level in a week on the back of a stronger dollar and a sharp decline in oil prices.

Spot gold dropped as low as $903.50 an ounce and was at $907.10/908.30 an ounce by New York's last quote at 2:15 p.m. EDT (1815 GMT), down from $925.20/926.60 in New York late on Friday.

"The two key drivers have been both inflation concerns and the movements of the dollar. (But) those both have moved against the gold and we've seen prices come off amid some profit taking," said Suki Cooper, metals analyst at Barclays Capital.

A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

The dollar rose broadly after a report showed an unexpected rise in U.S. new-home sales in April, while data out of Europe raised concerns over the health of the euro zone economy.

The metal also came under pressure because of oil prices, which dropped as much as $4 to just above $128 a barrel, after a stronger U.S. dollar helped to pull prices down from peaks hit when rebels attacked Nigerian oil facilities.

"Volatility looks set to remain high in the coming days with the dollar and oil to continue providing much of the metals intra-day direction," James Moore, precious metals analyst at TheBullionDesk.com, said in a daily market report.

U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange settled down $17.90, or 1.9 percent, at $907.90 an ounce.

"Gold will follow oil's movement for a while, but it will break free and rise sharply if inflation keeps creeping higher," said one New Jersey-based gold trader.

Other precious metals followed suit as spot silver fell more than 4 percent and platinum also ended sharply lower.

Platinum hit a high of $2,189 an ounce and was last at $2,118/2,138, versus $2,156.50/2,176.50 late in New York on Friday.

Silver fell to $17.41/17.47 an ounce from its previous U.S. finish of $18.18/18.26, while palladium fell to $436.50/444.50 from $446/454 late on Friday in New York.

(Additional reporting by Atul Prakash in London, editing by Matthew Lewis)