* Dollar slips after consumer sentiment data
* Gold market looking heavy for some weeks now
* Strong phusical demand to support
(Recasts, updates prices and comments)
By Rebekah Curtis and Humeyra Pamuk
LONDON, Sept 25 (Reuters) - Gold recovered from two-week
lows on Friday as the dollar slipped against the euro after data
showed consumer sentiment in the United States was improving.
Spot gold <XAU=> fell as low as $984.70 an ounce, its lowest
since September 10. It was bid at $991.40 an ounce at 1453 GMT
from $993.75 late in New York on Thursday.
Gold recovered its poise as the dollar fell after the
Reuters/University of Michigan index of consumer sentiment rose
to 73.5 in September from 65.7 in August. [] []
Traders said gold's relationship with the dollar over the
past few weeks has become stronger. A lower dollar makes
commodities cheaper for holders of other currencies.
"The currency market seems to have taken encouragement from
the consumer sentiment data... (which) suggests that Mr and Mrs
America are getting ready to return to the malls after an
extended leave of absence," said Citigroup analyst David
Thurtell.
Investors disappointed with gold's failure to break higher
have been selling gold over the last few days, traders said.
Bullion rallied to an eighteen month-high of $1,023.85 an
ounce last week, within a reach of its record high of $1,030.80
an ounce struck in March 2008.
"The market's been looking heavy for a while now ... The
dollar is generally a bit firmer," said Simon Weeks, director of
precious metals at Bank of Nova Scotia.
Earlier the dollar rose after data showed orders for U.S.
durable goods such as computers and appliances fell 2.4 percent
in August, confounding expectations for a modest increase.
The data added to lingering concern about the health of the
U.S. economy and caused investors to pare back positions in
currencies such as the euro.
CONFIDENCE
Group of 20 leaders, holding a two-day meeting in
Pittsburgh, pledged to keep emergency economic supports in place
until a durable recovery is secured, and to work together when
the time comes to remove them. []
This, analysts say, suggests low interest rates for longer,
which means expect further dollar weakness ahead.
"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.
Some analysts also said gold could draw support from
resilient demand in the physical market in Asia, specifically in
India, the world's largest consumer of gold.
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 from 1,101.735 tonnes the previous
business day. <XAUEXT-NYS-TT>
Silver <XAG=> was at $16.14 an ounce from $16.18, platinum
<XPT=> at $1,282 from $1,297.5 and palladium <XPD=> was at $290
from $291.5 on Thursday.
"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."
(Additional reporting by Pratima Desai; editing by Keiron
Henderson)
(Reporting by Pratima Desai;editing by xxxx)
