By Eric Onstad
LONDON (Reuters) - Gold prices slipped on Tuesday, weighed down by a firmer dollar and as some investors were squeezed by falling stocks and cashed in long positions in bullion.
The dollar climbed to the highest levels in over a week as as world stock markets extended their sell-off for a fourth day.
A stronger dollar makes commodities priced in the greenback more expensive for buyers using other currencies.
Spot gold was down 0.7 percent at $1,330.04 per ounce at 1530 GMT, erasing Monday's 0.5 percent gain.
U.S. gold futures for April delivery shed 0.3 percent to $1,332.30 per ounce on Tuesday.
The dollar is expected to extend its rebound in the first half of the year and heap more pressure on gold, which could sink as low at $1,225, according to Carsten Menke, commodities analyst at Julius Baer in Zurich.
Gold saw no safe-haven boost from tumbling equity markets because the global economy is largely robust and shares are thought likely to rebound, Menke added.
"Given the overall positive economic environment, we don't think this will be the end of this bull market in equities and that is why we are not too positive on gold right now."
Analysts said gold may also be hit by selling from investors who piled into the market during a rally in December and early January, when prices surged 16 percent to a four-month peak.
Data on Friday showed speculators had boosted their net long position in COMEX gold contracts to their highest levels since late September.
"Gold has traded relatively calmly during the bond and stock market turmoil this past week," Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said in a note. "Gold, however, is not immune following seven weeks of fund buying."
Last week, the U.S. Federal Reserve kept interest rates unchanged but said inflation was likely to rise this year and hinted at "further gradual" rate increases.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.
Spot silver dropped 0.6 percent to $16.65 per ounce. It fell 3.7 percent on Friday, its biggest one-day decline since December 2016.
Platinum fell 0.2 percent to $987.30 per ounce, while palladium shed 2.4 percent to $1,005.70 per ounce after touching $1,002.22, its lowest since Dec. 12, 2017.
Palladium rose to an all-time high of $1,138 on Jan. 15 on higher automotive demand and supply shortages.
(Additional reporting by Nithin Prasad and Nallur Sethuraman in Bengaluru; Editing by Mark Heinrich)
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