LONDON, Aug 26: Gold slipped more than 1 per cent in Europe on Tuesday as weaker-than-forecast German economic data and growing expectations for a euro zone rate cut sent the single currency to a six-month low against the dollar.

A stronger dollar typically pressures gold, as the metal is often bought as a hedge against weakness in the U.S. currency.

Gold slipped to $809.60/810.60 an ounce at 0916 GMT from $820.20/821.40 an ounce late in New York on Monday.

While the metal has taken support in recent sessions from an upsurge in physical demand for jewellery, coins and bars, analysts say this is unlikely to be enough to counteract the effects of a strengthening dollar.

Demand should pick up in the world’s biggest gold market, India, ahead of the Hindi festival of Diwali in October, but with prices seen poised for further falls, serious buyers are likely to hold off until next month, analysts said.

The other main external driver of gold, oil, also slipped by more than $1 a barrel, further undermining support for the precious metal.

Gold prices should remain well supported today as investors watch oil market dynamics,” Madinane added.

Traders will also be looking to a raft of US data due out later in the session for clues as to the next direction of the dollar, and consequently of gold.

US new home sales for July, August consumer confidence, the S&P/Case-Shiller home price index for June and Redbook weekly retail sales are all due out later in the session.

In US trading hours, the Federal Open Markets Committee will release the minutes of its Aug 5 meeting.

Among other precious metals, silver eased to $13.15/13.20 an ounce from $13.37/13.43 an ounce late in New York. The metal, which normally tracks gold, tumbled to $12.39 in mid-August, its weakest since last September.

Platinum and palladium were relatively steady after recently suffering sharp falls.

Spot platinum edged down to $1,410/1,420 an ounce from $1,420/1,440 late in New York, while palladium was steady at $285/290 an ounce from $285/293 an ounce.

Good chart support is expected at $278/270 in the coming sessions, although for now the metal is likely to struggle to regain the $300 level, said James Moore, an analyst at TheBullionDesk.com.—Reuters