LONDON, June 12: Gold slipped on Thursday, shedding more than 1.5 per cent at its session low, as the dollar rebounded against the euro after Wednesday's losses, and oil prices eased.

Gold fell to $869.00/869.50 an ounce at 0955 GMT from $881.15/882.55 late in New York on Wednesday, having earlier touched an intraday low of $867.00.

The precious metal came under pressure as the US currency hit a one-month high against a basket of currencies..

Gold has see-sawed this week in line with the dollar and the euro as expectations of U.S. and euro zone interest rate hikes have fluctuated.

Gold has been volatile, but within a relatively narrow trading range, said Standard Bank analyst Walter de Wet.

We are seeing gold tracking forex, but the moves have been a lot less amplified than they used to be. There is so much uncertainty regarding inflation and where crude oil is going.

Falling crude prices are pressuring gold, which is often bought as a hedge against oil-led inflation. Oil prices slipped after rising sharply on Wednesday on the back of a further decline in US crude stocks.

But with prices still firm over $130 a barrel and within reach of the all-time high they set at the end of last week, crude oil definimately provides a floor in gold prices, said de Wet.

Forex, however, remained the in driver. The dollar has taken a firmer tone this week after a raft of comments from US officials expressing concern over the currency's weakness.

US Federal Reserve Chairman Ben Bernanke’s increased emphasis on rising inflation has been interpreted as a sign that an interest rate hike may be on the cards later this year.

The precious metal benefits from a weaker dollar as it is seen as an alternative investment, while a softer US currency also makes dollar-priced metals such as gold cheaper for holders of other currencies.

Platinum therefore looks likely to outperform gold as dollar strengthens, Fairfax IS analyst John Meyer said.

Among other precious metals, palladium edged down to $423.50/431.50 against 424.00/432.00, while silver tracked gold lower to $16.57/16.63 from $16.88/16.95.—Reuters