* Dollar index at lowest since end-January
* Crude oil, copper at lowest since 2009
* Platinum down 4.5 pct, palladium at 3-year low
(Rewrites throughout, updates prices; adds comment, second
byline, NEW YORK dateline)
By Marcy Nicholson and Clara Denina
NEW YORK/LONDON, Aug 24 (Reuters) - Gold turned lower on
Monday, as the dollar pared losses, and U.S. shares and other
commodity markets staged a comeback while the white precious
metals fell on concerns about the Chinese economy.
World stock markets initially plunged after a near-9 percent
dive in China shares, attracting safe haven buying to gold as
crude oil futures LCOc1 fell sharply to 6-1/2-year lows and
copper CMCU3 to a six-year low. MKTS/GLOB
Spot gold XAU= was down 0.7 percent at $1,152.45 an ounce,
after rising to $1,167.50 an ounce. U.S. December gold futures
GCcv1 settled down 0.5 percent at $1,153.60 an ounce.
Platinum XPT= dropped as much as 4.5 percent, palladium
XPD= hit a three-year low at $563.72 an ounce and silver
XAG= fell 4.8 percent to the lowest since Aug. 6 at $14.57 a
ounce.
The 19-commodity Thomson Reuters CoreCommodity Index
.TRJCRB fell as much as 3.2 percent to the lowest level since
December 2002 after slumping Chinese equities fueled worries of
a hard landing in the world's biggest consumer of raw materials.
COM/WRAP
"There is no real fundamental reason to buy gold with
interest rates purportedly going to rise soon and I anticipate
that those holding a small percentage of gold in their portfolio
would be inclined to liquidate as their equity portfolio's get
pummeled," said Barry Steinman, an independent trader in
Philadelphia.
The U.S. dollar .DXY fell 2.5 percent to its lowest since
the end of January before paring losses.
"Today's action is more related to equity flows rather than
anything else," said Bart Melek, head of commodity strategy for
TD Securities in Toronto.
Gold has now rebounded 7 percent from a 5-1/2-year low of
$1,077 reached in late July, benefiting from uncertainty posed
by China's surprise devaluation of its yuan currency.
"The re-pricing of the Fed rate hike is supportive in the
short term but even though this has been pushed back, it will
happen at some point and that will prevent any significant
recovery in the gold price," said Danske Bank senior analyst
Jens Pedersen when bullion prices were firm.
Worries about global deflation, however, would not bode well
for gold, typically seen as a hedge against inflation.
"Deflation by itself is not positive for gold ... but
because so much hinges on what the Fed will do later this year,
any increased expectation of low inflation or deflation for a
period of time means that a rate rise is pushed back even
further into the future," Mitsubishi Corp strategist Jonathan
Butler said.