August 26, 2015 / 10:26 AM / 4 years ago

PRECIOUS-Precious metals tumble on dollar; investors monitor China, Fed

* Gold down for third straight session

* Palladium, silver at multi-year lows

* U.S. durable goods orders up 2 pct in July

* Sept. interest rate hike “seems less compelling” -Dudley (Updates prices; adds comment, second byline, NEW YORK dateline)

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, Aug 26 (Reuters) - Gold slipped 2 percent on Wednesday as the dollar gained and U.S. stocks advanced, while investors kept a close eye on China’s efforts to support its economy.

Gold’s losses, combined with sliding copper prices, also hurt sentiment in the more industrial precious metals. Silver fell 5.2 percent to $13.93 per ounce, its lowest since August 2009. Palladium, mainly used in emissions control systems for cars, trucks and other vehicles, fell 3.4 percent to a five-year low of $518.00 per ounce.

“Negative sentiment in precious metals in the past two days is due to a stronger dollar and a partial rebound in stock markets,” Commerzbank analyst Carsten Fritsch said.

Wall Street advanced, while European shares and commodities fell as investors balanced strong U.S. economic data and policy comments with fears about China’s slowing economy.

Spot gold fell as much as 2 percent to a one-week low of $1,117.35 an ounce, but was down 1.2 percent at $1,126.66 by 3:03 p.m. EDT (1903 GMT). It was its third straight decline from last week’s seven-week high.

U.S. gold for December delivery settled down 1.2 percent, at $1,124.60 an ounce.

“Gold is right now suffering from the aftermath of Monday,” said director of research for ETF Securities in New York, referring to Monday’s near 9-percent dive in China shares that caused world stock and commodity markets to plunge.

Global stocks have lost more than $5 trillion since China devalued its currency on Aug. 11.

“Nothing looks particularly attractive at the moment; the volatility in equity markets, the very low level of bond yields,” said Julian Jessop, chief global economist at Capital Economics.

“Currencies on the other hand seem to be more driven by perceptions of what the Fed might do on (interest) rates, while there haven’t really been major and obvious big moves in safe havens.”

In the clearest indication yet that fears of a Chinese economic slowdown could influence U.S. monetary policy, New York Fed President William Dudley said the prospect of a September rate hike “seems less compelling” than it was only weeks ago.

The dollar rose 0.6 percent against a basket of leading currencies after U.S. data showed durable goods orders gained 2 percent in July, suggesting underlying strength in the economy that could still allow the U.S. Federal Reserve to raise rates this year.

Platinum was the only precious metal trading in positive territory, having turned up 0.3 percent at $978 an ounce. (Additional reporting by Manolo Serapio Jr in Manila; Editing by William Hardy, David Goodman and Marguerita Choy)

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