* Gold finds relief as dollar slides
* Market still mired at lows as investment appeal wanes
* N.Korea test has little effect as macro factors dominate
By Clara Denina
LONDON, Feb 12 Gold clawed back from its lowest
in over a month on Tuesday, as the dollar fell following a
statement from the Group of Seven industrialised countries
reaffirming commitment to market-determined exchange rates.
However the market still struggled to regain positive
territory as investors concentrated on a brighter global
economic picture. Gold also failed to reprise its safe-haven
role after North Korea confirmed it had conducted an underground
Gold hit a low of $1,638.82 an ounce early on
Tuesday, its lowest since Jan. 4, later rallying to $1,648.41 an
ounce by 1521 GMT, flat on the day. U.S. gold futures
for April delivery also were also steady at $1,648.70 an ounce.
The dollar index, which rose in early trade to a one-month
high against a basket of currencies, fell back after the G7
nations reiterated a commitment to market-determined exchange
rates and said fiscal and monetary policies must not be directed
at devaluing currencies.
"A combination of elements, including dollar weakness after
the G7 statement, rebounding stock markets and stronger oil
prices, helped gold's bounce back from one-month lows,"
Quantative Commodity Research consultant Peter Fertig said.
The G7 intervention followed a round of rhetoric about
currency wars, prompted largely by Japan's new government
pressing for an aggressive expansion of monetary policy, which
has seen the yen weaken sharply.
"The next focus for the market is the G20 meeting on Friday
and Saturday, where finance ministers can give more clues on
currencies," Danske Bank analyst Christin Tuxen said.
Technical selling pressure on gold started in the previous
session after prices slid through a succession of key support
levels and below $1,650, suggesting further liquidation is
Investor sentiment towards gold is still seen declining in
the short term, while volumes remain thin as most Asian players
are on holiday this week, analysts said.
"The physical demand remains anaemic with China away on
public holidays this week while the rupee weakened last week,
deterring Indian buyers," VTB analyst Andrey Kryuchenkov said.
"At this point, bullion buyers in Asia would not want to get
involved in an investor driven market when sentiment towards
gold continues to sink."
Gold has underperformed other precious metals since the
start of the year as signs of improved economic recovery have
deterred investors, who have favoured riskier assets such as
equities and more industrial metals such as platinum and
palladium, analysts said.
"The ever increasing macro confidence has dented bullion's
traditional safe-haven appeal, while alternative and more
volatile assets, including PGMs, offer better returns away from
gold," Kryuchenkov said.
Platinum and palladium rose strongly on
increased buying activity and strong fundamentals, although
remaining below recent highs.
Spot platinum rose 1.2 percent to $1,705.49 an ounce, while
palladium was up 1.5 percent to $767.
Year to date, the platinum group metals have benefited from
an improving economic outlook and after mining disruptions in
South Africa, as well as a drop in supply from Russia, triggered
fears of a deficit.
(Editing by Veronica Brown and Jane Baird)