* Gold eases but remains near 2-month high
* ETF holdings rise 1.2 pct
* Market ignores news of N.Korea nuclear test, missile
launch
(Updates prices, add comment)
By Miho Yoshikawa
TOKYO, May 25 (Reuters) - Gold prices softened on Monday
but remained within sight of a two-month high above $960
touched in the previous session, retaining their sheen in the
face of a weaker dollar.
Crude oil's rise to a six-month high has also benefited
gold, which is often bought both as an alternative to the
dollar and as an inflation hedge.
Gold markets showed little initial reaction to a report by
South Korea's Yonhap news agency that quoted a ruling party
official as saying North Korea conducted a nuclear test on
Monday. [] []
North Korea also fired a short-range missile just hours
after it said it had conducted a nuclear test, Yonhap said.
[]
But North Korea's latest provocation, coming after what it
called a peaceful satellite launch that sent a rocket over
Japan earlier in the year, was not expected to have a lasting
impact on investors who have become accustomed to such
sabre-rattling.
"By right, when we get such news, safe havens such as gold
should get a bit of a boost," said Adrian Koh, an analyst at at
Phillip Futures.
"But I guess the markets are taking the news in their
stride, and perhaps we've got to see more details on the test
before acting on it," he said.
Public holidays on Monday in the United States and Britain
may have also accounted for the lack of market reaction, as was
the fact that North Korea had warned about conducting such a
test for weeks.
"If the U.S. and UK markets were open, price action would
have been bigger, but given that players are just in Asia, the
reaction is limited," said a trader at a Japanese trading firm.
"News of North Korea's nuclear test or firing missiles are
not perceived as fresh news, so in that sense reaction was
marginal."
Gold <XAU=> was at $954.85 per ounce at 0601 GMT, down 0.1
percent from New York's notional close of $955.85.
On Friday, bullion touched a high of $961.30 an ounce, its
highest since March 20.
"Gold has most certainly been driven by recent weakness in
the dollar and that looks set to continue for the time being,"
said Darren Heathcote of Investec Australia in Sydney.
The dollar steadied on Monday, holding near a five-month
low hit against a basket of currencies last week when concern
that the U.S. government debt may lose its AAA rating prompted
investors to sell the world's reserve currency. []
Heathcote said that if gold topped the next key resistance
level of $962, it could move towards $1,000. The metal last
rose above $1,000 in late February, its highest level since
March 2008.
Oil prices fell towards $61 a barrel on Monday, shedding
some of the previous session's gains but hovering not far off
their six-month high, on growing risk aversion after North
Korea said it had successfully conducted a nuclear test. []
"Oil is certainly helping (gold). $62 a barrel is pretty
good, pretty bullish," Heathcote said.
A return of investor interest in gold was also underscored
by the slight rise in gold-backed exchange-traded funds.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings rose to 1,118.76
tonnes as of May 22, up 13.14 tonnes or 1.2 percent from the
previous business day.
Holdings hit a record high of 1,127.68 tonnes in early
April. []
Precious metals prices at 0610 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 955.25 -0.60 -0.06 8.53
Spot Silver 14.61 -0.02 -0.14 29.06
Spot Platinum 1151.00 -1.50 -0.13 23.50
Spot Palladium 232.00 0.00 +0.00 25.75
TOCOM Gold 2935.00 43.00 +1.49 14.07
28996
TOCOM Platinum 3551.00 53.00 +1.52 33.90
11169
TOCOM Silver 444.30 8.70 +2.00 39.15
320
TOCOM Palladium 720.00 12.00 +1.69 30.91
644
Euro/Dollar 1.4017
Dollar/Yen 95.10 TOCOM prices in yen per gram, except
TOCOM silver which is priced in yen per 10 grams. Spot prices
in $ per ounce.
(Additional reporting by Chikako Mogi; Editing by Ben Tan)
