LONDON, Aug 26 (Reuters) - Gold slipped more than 1 percent in Europe on Tuesday as weaker-than-forecast German economic data and growing expectations for a euro zone rate cut sent the single currency to a six-month low against the dollar.
A stronger dollar typically pressures gold, as the metal is often bought as a hedge against weakness in the U.S. currency.
Gold slipped to $809.60/810.60 an ounce at 0916 GMT from $820.20/821.40 an ounce late in New York on Monday.
"Currencies are moving gold around," Fairfax analyst John Meyerm said.
"We saw a very sharp move this morning in favour of the dollar, which has accelerated what has been a recent trend in dollar strength against the euro."
"Gold is tracking the euro, and expectations that oil will move lower," he added.
The euro fell over a cent to a six-month low below $1.46 after the German Ifo business confidence index slumped to its lowest in three years, fanning speculation a euro zone rate cut may be in the offing.
The other main external driver of gold, oil, also slipped by more than $1 a barrel, further undermining support for the precious metal.
Crude prices were also pressured by the strengthening greenback, which makes dollar-priced oil more expensive for holders of other currencies.
"Oil prices might decouple from the greenback's movements today as investors watch the storm's development," said Manqoba Madinane, metals analyst at Standard Bank.
"(Gold) prices should remain well supported today as investors watch oil market dynamics," Madinane added.
Traders will also be looking to a raft of U.S. data due out later in the session for clues as to the next direction of the dollar, and consequently of gold.
U.S. new home sales for July, August consumer confidence, the S&P/Case-Shiller home price index for June and Redbook weekly retail sales are all due out later in the session.
In U.S. trading hours, the Federal Open Markets Committee will release the minutes of its Aug 5 meeting.
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