LONDON, Sept 30: Gold slips below $900 an ounce in Europe on Tuesday as a firmer dollar and weakness in other commodities such as oil and industrial metals encouraged profit- taking.

Platinum and palladium tumbled as investors worried about the outlook for carmakers who are major consumers of the platinum group metals.

Spot gold was quoted at $897.90/899.90 against $903.25 an ounce at the nominal New York close on Monday.

Both oil and industrial metals fell sharply on Tuesday in the wake of the news, with oil sliding more than $2 a barrel, nickel, lead and tin all falling 5 per cent and copper 4 per cent.

The markets are jittery after equities fell in Asia and Europe after the US House of Representatives’ shock rejection of a $700 billion plan to bail out financial institutions.

US stock markets plummeted, but safe haven assets such as treasury bills and gold soared, with the precious metal rocketing nearly 5pc to $920 an ounce.

However gold failed to hold gains, as even the traditional safe haven metal fell victim to selling pressure. But despite early profit-taking, traders say the metal is still out perfoming other assets.

Gold is performing better than any other commodity at the moment, said Blumenroth. Other commodities such as platinum or oil are all going south, and gold is just holding this level.

A poll of delegates to the London Bullion Market Association annual conference in Kyoto showed they believe spot gold will rise by about 6 per cent to $958.60 by November next year, while platinum and palladium prices are expected to soar.

Among other precious metals, silver was quoted at $13.02/13.10 an ounce against $13.07 at the nominal New York close on Monday.

The platinum group metals slipped sharply as investors worried about the outlook for demand from carmakers, who are major consumers of the metals for use in catalytic converters.

Platinum is largely an industrial metal with its main market being in auto catalysts, said Fairfax analyst John Meyer.

Consequently, despite being a precious metal it does not benefit in the same way as gold does during periods of weakening economies.

Spot platinum was down nearly 4 per cent to $1,040/1,060 from $1,080 an ounce at the nominal New York close on Monday, while palladium slid more than 1 per cent to $208.50/216.50 from $211.50.

—Reuters