Gold slid more than 1 percent on Monday as a stronger dollar dented interest in the metal as an alternative asset, with investors buying the currency as a safe store of value amid fears over the economic outlook.

Strength in the U.S. unit kept most dollar-priced commodities under pressure as it made them more expensive for holders of other currencies, analysts said.

Spot gold was bid at $921.20 an ounce at 1507 GMT, against $932.30 an ounce late in New York on Friday.

U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $9.70 from Thursday’s close to $921.30 an ounce.

“There is a sell-off with the dollar strength,” said Standard Bank analyst Walter de Wet. “Gold is holding up quite well, compared to the other commodities. At these levels, we might see some physical buying.”

He said while this may lend support to prices, a break of the $920-922 level could lead to a retracement back to $900.

The dollar, along with the yen, gained broadly on Monday amid fears over the economic outlook, which led investors to shun riskier assets in favour of currencies perceived to be safe.

Investor confidence across the market has been subdued since weaker than expected jobs data from the United States last week. While gold often benefits from uncertainty in the wider markets, it is currently taking its cues chiefly from the dollar.

Traders are awaiting fresh direction from the outcome of the G8 meeting later in the week.

“The market will certainly be cautious ahead of the G8, (and) that nervousness could further limit the metal in the range,” said Pradeep Unni, senior trader at Richcomm Global Services.

“It’s ideal to be on the selling side, and the slide in oil prices may keep the prices subdued.”

PROSPECTS

Oil fell to below $65 a barrel on Monday, having touched a five-week low earlier in the session, pressured by doubts over prospects for a recovery in the global economy and energy demand.

Other industrial commodities such as copper and aluminium also fell.

Elsewhere, the Bombay Bullion Association said demand for gold and silver from India, the world’s biggest bullion consumer, is likely to be pressured further this year by an increase in import duty in the budget for 2009/10.

“As it is, business was bad,” said the association’s head, Suresh Hundia. “This will make it worse.” Indian gold imports tailed off last year as prices rose.

Bargain hunters emerged in India as prices fell on Monday, but other Asian buyers are awaiting a further price correction, dealers said.

Among other precious metals, silver tracked gold lower, falling to a near nine-week low of $13.00. It was later at $13.21 an ounce against $13.39.

“Interestingly, the gold to silver ratio surged higher in the past week, pushing above 69 on Friday,” VTB Capital analyst Andrey Kryuchenkov said in a note.

“Gold prices were almost unchanged in volatile trading last week. However, silver suffered not only from weakness on the (platinum) market, but also from a slight increase in risk aversion and resurfacing economic concerns.”

Platinum eased to a low of $1,138.50 an ounce, its weakest since late May, before recovering to $1,142.00 an ounce against $1,185.00, while palladium was at $241.50 against $248.50.

LONDON, July 6 (Reuters)