* Dollar index edges higher
* Oil prices off highs but still firm
(Updates prices, adds comment)
By Jan Harvey
LONDON, June 18 (Reuters) - Gold steadied in Europe on
Thursday as the dollar index pared gains, supporting interest in
the precious metal as a hedge against currency weakness.
Traders awaited May leading indicators and the Philadelphia
Fed June business activity index at 1400 GMT for their impact on
the currency markets.
Spot gold <XAU=> was bid at $938.10 an ounce at 1307 GMT,
against $938.40 an ounce late in New York on Wednesday. U.S.
gold futures for August delivery <GCQ9> on the COMEX division of
the New York Mercantile Exchange rose $2.90 to $938.90 an ounce.
"The commodities sector as a whole is a little bit choppy
right now, despite the short corrections that we've seen over
the last few days," said Tom Kendall, precious metals strategist
at Mitsubishi Corp.
"There is still a bit of a downward bias across the broader
metals and energy sector, but the dollar is what's driving most
of it," he said.
The dollar <.DXY> pared gains against a basket of
currencies, though it remained firmer.
The euro recovered losses against the U.S. currency and
jumped versus the Swiss franc amid talk the Bank for
International Settlements was acting on behalf of the Swiss
National Bank to defend the 1.50 franc level versus the single
currency. []
The dollar had already lifted from lows against a currency
basket after data showed the number of people staying on jobless
benefit after collecting an initial week of aid fell for the
first time since January.
Oil gave up its early gains to edge lower. Gold often tracks
crude, as it can be bought as a hedge against oil-led inflation.
[]
Strength in the U.S. currency makes all dollar-priced
commodities, including gold and oil, more expensive for holders
of other currencies.
U.S. stock futures turned higher after the jobless claims,
but weakness in European equities helped offset downward
pressure on gold. []
NEGATIVE TURN
European shares reversed initial gains to turn negative,
while world stocks fell towards a three-week low they hit on
Wednesday.
"(Gold) prices remain high despite profit taking in equity
markets, as investors continue to hold large cash ... reserves,"
said Fairfax analyst John Meyer in a note.
Investor interest in gold remains firm, though inflows into
bullion-backed exchange-traded funds have tailed off since
reaching highs at the beginning of 2009. Holdings of the SPDR
Gold Trust, the largest gold ETF, are still near record levels.
Spot platinum <XPT=> was at $1,204.50 an ounce against
$1,201, while palladium <XPD=> was flat at $240.50.
Platinum slipped below $1,200 an ounce for the first time
since 1 June on Wednesday, but quickly recovered from lows as
investors took advantage of lower prices.
"As with gold and silver, dip buying should continue to
offer support for platinum in the coming sessions," said James
Moore, an analyst at TheBullionDesk.com.
Silver <XAG=> was at $14.25 an ounce against $14.32.
Holdings of the world's largest silver ETF, the iShares Silver
Trust <SLV>, remained at record levels on Wednesday.
(Additional reporting by Kylie MacLellan; Editing by William
Hardy)
