LONDON, July 7: Gold slipped 1 per cent in Europe on Monday as the dollar firmed to a one-week high amid expectations the European Central Bank will not raise interest rates further and oil prices eased more than $2 a barrel.

Gold fell to $920.70/921.70 an ounce from $932.00/933.00 an ounce in London on Friday when the US markets were closed for Independence Day holiday.

The precious metal hit good support at its session low just above $918, but could be vulnerable to further weakness.

The euro is a bit weaker, the dollar is stronger and the oil price is slipping a bit, said Commerzbank analyst Eugen Weinberg. But also we are seeing that the equity markets are in better shape.

There has been a strong negative correlation between the gold price and the equity markets, he added. Risk aversion has led to an inflow into gold, so higher equity markets could see a lower gold price. With equities now see-sawing, any further recovery could pressure gold.

The dollar is also bouncing higher, striking a one-month high against a basket of currencies on Monday morning.

Investors were cheered by last week’s better-than-expected US jobs data, and are now looking ahead to comments this week from Federal Reserve Chairman Ben Bernanke.

In fundamental news, London-based ETF Securities said the amount of gold it holds to back its Physical Gold exchange-traded fund has risen 15 per cent in the last week to a record 1.459 million ounces.

The rise reflected gains across its physically backed precious metals ETFs, with its platinum and palladium holdings also rising to new records and silver ticking up 1 per cent.

Platinum group metals prices are also sliding, with platinum shedding 1.5 per cent to a one-month low and palladium just under 1 per cent weaker, as investors took profits after the metals’ recent gains, amid fears demand may slacken.

Lonmin, the world’s number three platinum producer, has reopened a smelter it closed last week for repairs, taking some support from platinum prices.

The company said it will lose 5,000-10,000 ounces of refined platinum sales due to the shutdown.

Spot platinum hit a low of $1,967.50 an ounce, its weakest level since June 5. It later recovered to trade at $1,977/1,997, down from $1,999.00/2,019.00 in London.—Reutrss