Gold wilts on oil, dollar

By Jan Harvey

LONDON (Reuters) - Gold edged lower on Monday as an uptick in the dollar against a basket of currencies dented interest in the precious metal as a currency hedge, and as oil prices slipped.

Silver fell to a 10-week low in early trade as a fall in industrial metals added to downward pressure exerted by weaker gold prices, and may face fresh losses if the dollar firms.

Spot gold was bid at $910.60 an ounce at 1458 GMT (10:58 a.m. EDT), against $912.15 an ounce late on Friday, having earlier touched a low of $907.40.

U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $1.80 to $910.70 an ounce.

"The oil price, the dollar and weakness in other metals such as silver and platinum are putting some pressure on gold," said Commerzbank analyst Eugen Weinberg.

The U.S. currency .DXY edged higher against a basket of currencies on Monday. A stronger dollar makes gold more expensive for holders of other currencies, and dents interest in bullion as a currency hedge.

The dollar has re-emerged as the chief driver of the gold price in recent months, after taking a back seat to risk aversion and falling stocks earlier in the year.

On other markets, oil, the bellwether of the commodities group, slipped more than $1 a barrel on concerns over the outlook for the global economy.

European equities turned positive by midday on Monday after hitting an 11-week low earlier in the day, while U.S. stocks rose as financial stocks were lifted by analysts' comments.

VULNERABLE

Gold, which fell 2 percent last week as dollar strength and losses in other commodities pressured prices, was seen as vulnerable to further losses from here, with the $900 an ounce level of support keenly eyed.

"I don't expect prices to stabilize here," said Weinberg. "We will see a stronger dollar, and we will see gold below $900, which will trigger further technical selling."

Inflows into gold-backed exchange-traded funds have eased dramatically since the first quarter.

Holdings of the largest, New York's SPDR Gold Trust, were unchanged for a second consecutive session on Friday, though the smaller European ETFs have reported some activity in recent weeks.

Other precious metals also slipped, with silver tracking gold and base metals down to hit a fresh 10-week low of $12.44 an ounce. It was later at $12.52 an ounce against $12.65. The gold-silver ratio has risen to 73 from about 62 in early May.