LONDON, Jan 20: Gold fell in Europe on Tuesday as the dollar strengthened against the euro, denting the precious metal’s appeal as an inflation hedge, and oil prices tumbled nearly 10 per cent.

The precious metal is also suffering from sluggish jewellery demand in key markets such as India, dealers said, as the relative strength in gold prices dampens buying interest.

Spot gold was quoted at $830.90/832.90 an ounce at 1014 GMT, down from $834.55 late on Monday. Earlier it touched a low of $822.90, down more than 1 per cent.

The other main external driver of gold, crude oil, tumbled almost 10 per cent, after Russia and Ukraine agreed on a gas deal that will help secure supplies to Europe and as traders worried over the outlook for demand.

Gold tends to move in line with crude, as it is often used as a hedge against oil-led inflation. Moves in the oil price are also an indicator of interest in commodities as an asset class.

Overall, fears over the outlook for the global economy and the financial system are boosting interest in products like exchange-traded funds -- which issue securities backed by actual stocks of gold. These are seen as less risky than paper assets.

The world’s largest gold-backed ETF, New York’s SPDR Gold Trust, said its holdings are at a record 795.25 tons.

However, demand for consumer products such as gold jewellery is suffering from relatively high gold prices. Jewellery demand in the world’s largest bullion market, India, slowed on Tuesday as buyers waited for prices to fall.

Demand may pick up if prices move below 12,500 rupees locally and $800 on the international markets, Mayank Khemka, managing director of Khemka International in Delhi, said.

Among other precious metals, platinum weakened a touch to $940.50/945.50 an ounce, against $948.50 late on Monday.

Prices have remained in a relatively narrow range below $1,000 an ounce as traders continue to fret about the demand outlook as the economy slows.—Reuters