London gold tumbles

Gold tumbled to a two-month low below the key $900-an-ounce level on Tuesday as a dollar rise against the euro dampened the metal's appeal as an alternative investment and triggered bullion selling. Falling oil prices also put pressure on gold, which is traditionally seen as a hedge against inflation.
Other metals suffered losses, with silver slipping 5 percent to a two-month low and platinum falling about 6 percent. Gold hit a low of $872.90 and was at $877.80/878.70 an ounce at 1545 GMT, against $916.20/917.00 late in New York on Monday, when it fell 2 percent. The metal has fallen about 15 percent since hitting a record high of $1,030.80 two weeks ago.
"Given the elevated level of speculative interest, we would not rule out a deepening of the current correction in prices," said Suki Cooper, precious metals analyst at Barclays Capital.
"However, the overall environment for gold remains positive over the forthcoming months," she said, adding the dollar was not expected to rise markedly against the euro in the short term, given the likelihood of poor US data this week.
The dollar rose after Swiss bank UBS announced an additional $19 billion of writedowns and Deutsche Bank said it expected to write down a more than the forecasted $4 billion in the first quarter, showing that credit problems were not limited to the United States.
But the dollar registered its biggest quarterly loss versus the euro in four years on Monday. A report showed on Tuesday that US factory activity contracted for a second straight month in March. The market is also waiting for Friday's jobs figures, which are expected to show US employers cut payrolls in March for the third straight month.
Weaker oil prices also dragged down precious metals. Oil fell to near $100 a barrel, extending losses from the previous session on selling by funds and a strengthening dollar, but supported by expectations of a drop in US gasoline stocks.
"Over the past couple of days, a firmer dollar and weaker oil prices certainly weighed on the gold market and should do so in the short term," said Daniel Hynes, metals strategist at Merrill Lynch. "We still believe that the outlook is strong and expect to see a rebound, but for the moment those headwinds will keep any gains relatively limited."
In industry news, Turkey's gold bullion imports fell in March by 95 percent compared with February to their lowest-ever monthly figure of 675 kg. Imports fell 13.2 percent year-on-year in the first quarter to 32.3 tonnes.
US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell to $876.30 but then recovered slightly to trade at 887.20, down 3.7 percent. "Given gold's recent movements, the yellow metal will remain vulnerable to selling pressure in the coming sessions, particularly as the second quarter is traditionally weaker than the first due to general market cycles," James Moore, analyst at TheBullionDesk.com, said in a market report.
Platinum slipped to a one-week low of $1,888 an ounce and was last at $1,895/1,905, against $2,005/2,025 in New York late on Monday. It has fallen over 17 percent since hitting a record of $2,290 on March 4, as a power crisis in top producer South Africa hit output.
South Africa's state power utility Eskom was near a deal to buy more electricity from Mozambique's Cahora Bassa development to try to ease the problem, a Mozambican official said. Silver fell to $16.32 and was last at $16.54/16.59 an ounce, the lowest since early February, from $17.27/17.32 in New York. Palladium fell to $421/428 an ounce from $438/443.