Gold slips in Europe

Gold prices slipped on Wednesday, falling below the $950 mark as the dollar rallied against the euro, but prices were supported at the lower levels on potential inflationary concerns from a higher oil price. Spot gold was bid at $949.70 an ounce at 1520 GMT, against $953.75 an ounce late in New York on Tuesday.
Earlier the metal hit a high of $965.25 as the dollar was pressured by news Russia plans to cut the proportion of US Treasuries in its reserves. The dollar's later recovery took the gloss off bullion as it made the metal more expensive for non-US investors. "The US dollar found some support and recovered trading...and this is a factor which is tracking down gold," said Peter Fertig, consultant at Quantitative Commodity Research.
The euro fell below $1.40 versus the dollar, while the US unit rose 0.6 percent against a basket of major rival currencies. Oil prices climbed to $70.80 a barrel, having earlier hit a high of $71.79, boosted by a larger than expected fall in crude stocks and a forecast that falling demand could be bottoming out. Strength in crude prices is seen as a reflection of potential inflation and supported gold's role as a hedge against that.
European equities rose, with energy companies leading on strength in crude prices and banks gaining. Wall Street opened higher but turned negative as investors worried that surging oil prices may hurt spending and hamper any future economic recovery.
The rate at which gold miners cut their hedging positions slowed in the first quarter of 2009 to 110,000 ounces, the lowest level of net de-hedging seen since 20 metals consultancy GFMS said in a report on Wednesday. Hedging allows producers to lock in prices for future output, but it can backfire if metals prices rise above the hedged price. Buying back of outstanding hedge positions has been an important element of demand in past years.
Among other precious metals, silver fell to $15.04 an ounce against $15.21. Platinum rose to $1,260.00 an ounce against $1,247, while palladium firmed to $257.00 against $252.50. Investment interest in platinum remained buoyant. ETF Securities reported a fresh 11,000-ounce inflow into its ETFS Physical Platinum fund on Tuesday, meaning its holdings are now up 15 percent week-on-week.