* Gold buoyed by expectations of further dollar weakness
* SPDR holdings dip
(Updates prices; adds detail; analyst comment)
By Rebekah Curtis
LONDON, Sept 25 (Reuters) - Gold edged slightly higher on
Friday as the dollar retreated from its previous day's rally,
and as cautious investors eyed the Group of 20 meeting for
indications on how global economic recovery could progress.
Spot gold <XAU=> rose to $994.80 an ounce by 1159 GMT,
compared with $993.75 late in New York on Wednesday. It earlier
flirted with a 2-week low of $990.20, a level it stooped to on
Thursday when the dollar rallied. []
Looking ahead, analysts said expectations of further dollar
weakness would help gold to hold around the $1,000 level, with a
weaker U.S. currency making dollar-priced commodities cheaper
for holders of other currencies.
"It's been very much driven by the dollar," John Reade, head
of precious metals strategy at UBS, said of gold's recent
strength, while adding that bullion's move was less pronounced
in other major currencies.
The U.S. currency slipped on Friday after a draft communique
from the G20 in Pittsburg said economic stimulus measures would
remain in place for now, suggesting that interest rates,
including those in the United States, would remain low.
Bullion is up 7.5 percent so far this quarter, while in the
same period the dollar has fallen more than 4 percent against a
basket of major currencies.
"Expectations for ongoing dollar weakness are likely to
generate further investor buying in gold on a worldwide basis,"
said John Meyer, analyst at Fairfax investment bank.
"As confidence returns to markets the dollar, which was seen
as a safe haven, is likely to fall," he said, adding that a
decline in the dollar was likely to be gradual.
For more on the G20 summit, click on: []
PHYSICAL MARKET
Some analysts also said gold would draw support from
resilient demand in the physical market in Asia.
India's gold purchases have picked up as the festival season
gathers pace in the world's largest consumer.
But the world's largest gold-backed exchange-traded fund,
the SPDR Gold Trust <GLD>, said its holdings fell to 1,094.107
tonnes as of Sept. 24, down 0.7 percent from 1,101.735 tonnes
the previous business day. <XAUEXT-NYS-TT>
Among other precious metals, silver <XAG=> was unchanged at
$16.18, platinum was at $1,295 from $1,297.5 and palladium was
at $290 from $291.5.
"For most of the precious metals investor inflows have been
very strong," said Dan Smith, analyst at Standard Charted.
"It suggests to us gold is going to remain resilient. Our
advice is you should be long in gold and platinum, and short in
some of the base metals."
(Editing by Keiron Henderson)
