>Spot gold extends fall on dollar strength

London - Spot gold extended losses in Europe Wednesday due to a stronger U.S. dollar against the euro, and traders said with volumes low and demand down the metal could fall further.

"For the time being we see limited near term upside to gold prices, with equity markets weakening leading to strengthening of the dollar which is a negative for gold," said investment bank Fairfax IS.

Gold fell sharply Tuesday after weaker than expected U.S. consumer confidence sparked selling across commodities. That selling could carry on and gold may test $925 a troy ounce, said a London-based trader.

"The speculative line of least resistance appears to be emerging back to the downside," the trader said.

At 0923 GMT spot gold is trading at $934.17/oz, down 0.3% from Tuesday's close.

The rest of the precious metals traded down too. Spot silver was at $13.54/oz, down 1.1%. Spot platinum was at $1,184.50/oz, down 0.7%. Spot palladium was at $254.50/oz, down 0.8%.

However, longer term the metal remains supported due to the shortage of major new mine projects and the potential for inflation from stimulus packages in U.S. dollar terms once Western economies begin to recover, Fairfax said.

The risk of a strike at South African gold operations is declining.

South Africa's largest gold producers signed a two-year wage agreement with unions. The deal replaces contracts that expired at the end of June and averts a threatened strike.

Source: COMMODITIESCONTROL