* Demand for gold as a haven diminishes
* Dollar firms versus euro, undermines support for bullion
(Adds comment, updates prices)
By Jan Harvey
LONDON, May 11 (Reuters) - Gold dipped in Europe on Monday
as hopes the hopes economic downturn may be bottoming out dented
interest in bullion as a haven, and as the dollar firmed.
Spot gold <XAU=> was bid at $911.65 an ounce at 1330 GMT,
against $916.05 an ounce late in New York on Friday. U.S. gold
futures for June delivery <GCM9> on the COMEX division of the
New York Mercantile Exchange fell $2.70 to $912.20 an ounce.
While buying of products like gold-backed exchange-traded
funds as a hedge against economic uncertainty drove prices
higher earlier in the year, hopes there may be light at the end
of the tunnel for the economy undermined those gains.
"Investment demand has almost staggered after gold entered
into a trading range of $864-$930 over the last two months,"
said Pradeep Unni, analyst at Richcomm Global Services.
"Record holdings... of gold by the gold-backed ETFs are
higher than the reserves of many nations, including those of
China, and is also nearly half of yearly mine production."
"If equity markets extend gains and the financial markets
show further semblance of stability, this hoarded gold can
return back to markets any time," he said.
European shares were lower by midday, but Asian shares rose
to their highest in seven months as traders focused on the
message of U.S. payrolls data released on Friday, which showed
the economy shed fewer jobs than expected. []
China added to positive news on Monday, as deputy Central
Bank governor Su Ning told a conference the government's
stimulus had worked better than expected. []
Commerzbank analyst Eugen Weinberg said investors were
turning back to nominally "riskier" assets such as stocks. "Gold
is a safe haven, and you don't need to be safe at the moment,"
he said.
On the foreign exchange markets, the dollar fell to its
lowest in seven weeks versus the euro in early trade. However,
it later recovered as investors took profits on the single
currency, further weighing on gold. []
The precious metal is often bought as an alternative asset
to the dollar.
TRICKLE
Investment in gold-backed exchange-traded funds remained
lacklustre last week.
Holdings of the world's largest, the SPDR Gold Trust <GLD>,
edged down 0.36 tonnes in the week to May 8 to 1,104.09 tonnes,
while those of the three gold ETFs operated by London's ETF
Securities were little changed. [] []
Gold demand from India, the world's biggest bullion buyer,
also slowed to a trickle on Monday, dealers said.[]
Buying precious metals to back ETFs has been a significant
source of demand for gold and silver in recent years.
Silver <XAG=> tracked gold down to $13.81 an ounce against
$13.98. Among other precious metals, platinum <XPT=> eased to
$1,111 an ounce from $1,145.50 and palladium <XPD=> dipped to
$233.50 from $238.50, tracking losses in the industrial metals.
Lonmin <LMI.L>, the world's third-biggest platinum
producer, unveiled a $457 million rights issue on Monday to cut
its debt. []
Investec said the company's guidance was downbeat, with
management saying it is "not planning for any significant
recovery in platinum group metals prices in the next 12 months".
(Reporting by Jan Harvey; Editing by William Hardy)
