By Jan Harvey
LONDON (Reuters) - Gold fell on Tuesday as global markets found some respite after the previous day's rout, with European stocks rising more than 3 percent and the dollar rebounding from a seven-month low versus the euro and the yen.
Autocatalyst metal palladium continued to slide, however, falling as much as 7 percent to its lowest in five years.
Spot gold was down 0.4 percent at $1,150.40 an ounce at 0954 GMT.
U.S. gold futures for December delivery were down $3.70 an ounce at $1,149.90.
Gold had edged lower on Monday, with some traders citing liquidation to cover losses on other markets, but largely held its ground after a plunge in Chinese equities sent world stocks and commodity prices tumbling and knocked the dollar.
While Chinese stocks fell another 8 percent on Tuesday, markets elsewhere rebounded, with European shares climbing, oil prices recovering from 6-1/2 year lows, and the dollar rising 0.4 percent. That has put pressure on gold.
"If those trends continue, then certainly it will create some short-term pressure on gold prices as the initial fear in the marketplace that we saw yesterday dissipates," Standard Chartered analyst Nicholas Snowden said. "But it's still an extremely uncertain setting and in the short term gold will benefit from that."
Gold has rebounded sharply from the 5-1/2 year low it hit in July on the back of expectations that the Federal Reserve is on track to raise interest rates this year for the first time in nearly a decade, lifting the opportunity cost of holding gold while boosting the dollar.
While those expectations have receded after a dovish reading of the minutes of the Fed's last policy meeting and on fears of a broader global economic slowdown, they are keeping a lid on gold's gains.
"We're still in an environment where we know U.S. interest rates will go up," Snowden added. "For gold, that limits how much of a bid you will see, even with the sort of financial market turmoil that ensued yesterday."
Palladium fell to a low of $528.50 an ounce, its weakest since September 2010, and was later down 2.9 percent at $554.50.
"Platinum group metals have noticeably been lagging in recent weeks, failing to benefit more from gold's rebound," UBS said in a note.
Platinum was down 0.1 percent at $987 an ounce, while silver was up 0.1 percent at $14.79 an ounce.
(Additional reporting by Manolo Serapio Jr. in Manila; editing by Jason Neely)
