Gold slips below $900/oz, risk aversion eases

By Jan Harvey

LONDON (Reuters) - Gold held below $900 an ounce on Tuesday, giving up some of the previous sessions' gains, as easing risk aversion dampened interest in the precious metal.

Spot gold was quoted at $898.65/900.25 an ounce at 9:03 a.m. EST, against $902.65 in New York late on Monday. Earlier it slipped to a low of $891.60 an ounce.

U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange fell $10.30 an ounce to $898.50.

"One of the things that has really helped gold a lot has been the issues in the banking system," Michael Widmer, an analyst at BNP Paribas, said.

"Looking at the newsflow over the last few days, there was a bit of relief after Barclays' announcement (on its performance)," he said. "That took away some of the immediate buying (of gold)."

On the currency markets, typically a key driver of gold, the euro ceded early gains after hitting a one-week high versus the dollar. However, this failed to pressure gold as it lifted from lows.

Gold typically moves in the opposite direction to the dollar, but its usual relationship with the currency has weakened, with both assets slipping earlier on Tuesday as risk aversion eased.

"A stronger dollar implies panic about the economic outlook but should mean a weaker gold price, in theory," Daniel Smith, an analyst at Standard Chartered, said.