* Dollar steadies after losses, pressuring commodities
* SPDR gold, iShares silver ETFs both report inflows
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, June 2 (Reuters) - Gold edged lower in Europe on
Tuesday as the dollar steadied after hitting its lowest level
this year in the last session, stalling commodities' upward
drive.
Holdings of the world's largest gold and silver exchange
traded funds, New York's SPDR Gold Trust <GLD> and iShares
Silver Trust <SLV>, both rose on Monday, data showed.
Spot gold <XAU=> was bid at $970.80 an ounce at 0844 GMT,
against $973.95 an ounce late in New York on Monday.
"Gold is certainly tracking the dollar more than anything
else," Commerzbank analyst Eugen Weinberg said.
In the medium term, he added, while weak jewellery demand
and an uptick in production could limit gold's gains later this
year, economic developments could support bullion whether they
are positive or negative for the wider markets.
"If equity markets are dropping, gold is a safe haven," he
said. "If they are rising, it is an inflation (hedge)."
The dollar steadied on Tuesday, recovering from the 2009
lows it hit as reassuring economic data and a rally in stock
markets reduced demand for the reserve currency. []
Weakness in the U.S. currency boosted dollar-priced
commodities on Monday as they became cheaper for holders of
other currencies. Oil and base metals are now easing. []
"The week is likely to be dominated by further developments
on the currency market, with the rally possibly slowing down
if the dollar holds above 79/78.5," said VTB Capital analyst
Andrey Kryuchenkov in a note.
ETF HOLDINGS RISE
Holdings of the SPDR Gold Trust rose 15.27 tonnes to a
record 1,134.03 tonnes on June 1, the trust said. []
Buying of gold ETFs, which issue securities backed by
physical bullion, as a hedge against future risks such as
inflation, has been a major source of demand in recent months.
Market commentators fear government efforts to pump extra
liquidity into the financial system could cause a sharp rise in
inflation once an economic recovery takes hold.
Among other precious metals, silver <XAG=> was bid at $15.52
an ounce against $15.59, tracking easing gold prices, after they
touched a nine-month high of $15.94 an ounce. Holdings of the
largest silver ETF also rose 260.36 tonnes on Monday.
Platinum <XPT=> was at $1,207 an ounce against $1,208.50,
while palladium <XPD=> was at $237 against $238. Both posted
gains on Monday amid hopes for a recovery in the car industry,
which accounts for half of global consumption of the metals.
"The platinum group metals rallied on hopes that GM's filing
for bankruptcy protection will eventually help it regain
competitiveness and ensure its survival as an auto producer,"
HSBC analyst James Steel said in a note.
"Additionally, Ford announced plans to increase Q3
production of autos and light trucks in expectation of greater
consumer demand. If global auto demand stabilizes, the PGMs are
likely to be supported, we believe."
(Editing by Sue Thomas)
