LONDON, Jan 5: Gold slipped 1 per cent in Europe on Monday as a stronger dollar weighed on sentiment with traders eyeing oil market moves on mounting Middle East tensions.

Spot gold was quoted at $865.10/867.10 an ounce at down from $873.20 an ounce late in New York on Friday, having touched a session low of $860.20. US gold futures for February delivery fell $14.20 to $865.30 an ounce.

Gold is often bought as an alternative investment to the dollar and tends to move in the opposite direction to it.

However, it has slipped as oil gave up those gains.

Gold usually moves in line with oil prices, both because firmer crude boosts interest in the precious metal as a hedge against oil-led inflation and increases the appeal of commodities as an asset class.

Sales in Abu Dhabi fell 40 per cent in December from a month before, the emirate’s industry group said.

Gold buying in India, the world’s largest market for the precious metal, has been crimped by higher prices, traders said.

People would want to buy if prices fall below 12,500 rupees, said Mayank Khemka, managing director of Delhi-based Khemka International. Prices are currently around 13,500 rupees.

Fears over the outlook for the global economy lent powerful support to gold prices towards the end of last year. Gold was one of the only commodities to end the year with a slight gain, as investors flocked to buy the metal as a haven from risk.

Among other precious metals, silver slipped in line with gold to $11.14/11.22 an ounce from $11.52 late on Friday.

Platinum and palladium were steady, awaiting fresh direction from US auto sales figures due out later on Monday.

Both have been knocked sharply lower in recent months by fears over falling demand from carmakers, who account for more than half of global consumption of the metals.

Spot platinum eased to $932/937 an ounce from $944, while palladium dipped to $186/191 an ounce from $190.—Reuters