* Dollar recovers from 5-month low vs basket of currencies
* North Korea launches second nuclear test, denting stocks
(Adds comment, updates prices)
By Jan Harvey
LONDON, May 26 (Reuters) - Gold was down on Tuesday as the
dollar rebounded against the euro, curbing interest in bullion
as an alternative asset, but recovered some lost ground as the
U.S. currency pared gains after upbeat consumer confidence data.
Spot gold <XAU=> was bid at $951.55 an ounce at 1502 GMT,
down from $957.80 an ounce late on Monday but well off an
earlier low of $940.10.
U.S. gold futures for June delivery <GCM9> on the COMEX
division of the New York Mercantile Exchange were down $7.10 to
$951.80 an ounce.
"On the one side you have the stronger dollar... and on the
other you have lower equities and this still very risk-averse
sentiment," said Andrey Kryuchenkov, an analyst at VTB Capital.
"That has helped gold to recover from $940."
The dollar was firmer but pared gains against the euro after
data showed a key measure of consumer confidence rose in May.
The Conference Board's U.S. consumer confidence index rose to
54.9 in May from 40.8 in April, beating expectations for 42.0.
[]
The euro had slipped versus the U.S. currency in earlier
trade after a media report questioning the health of the German
banking system prompted traders to trim bets against the dollar.
World stocks fell with Asian shares leading the way, as
tension over North Korean nuclear tests added to questions over
the economic outlook. Weaker equities can divert investment into
the bullion market. []
Gold failed to benefit substantially from the North Korean
tensions. "It is curious (we) didn't see new buying of gold on
the back of the North Korea nuclear test, but maybe money has
gone into the dollar first," Fairfax analyst John Meyer said.
FIRMED
Elsewhere, gold exchange-traded fund holdings firmed a touch
after a period of stability.
On Friday holdings of the world's largest, the SPDR Gold
Trust <GLD>, climbed to 1,118.76 tonnes, while holdings of gold
ETFs operated by Zurich Cantonal Bank and Julius Baer <BAER.VX>
also rose last week. []
"We will be monitoring the inflows into the gold ETF with
particular care in the next few days," UBS analyst John Reade
said in a note.
"The gold market has changed again: driven now by dollar
weakness and fears of inflation, the metal will probably take
its direction from the strength (or lack thereof) of the U.S.
dollar."
Among other precious metals, silver <XAG=> was at $14.55 an
ounce against $14.71, tracking losses in gold. Platinum <XPT=>
was quoted at $1,134 an ounce against $1,149.50 late on Monday,
while palladium <XPD=> was at $229.50 against $231.50.
Both platinum and palladium, which are chiefly used as
components in autocatalysts, are struggling to post gains
against a background of turmoil in the car industry.
United Auto Workers' union officials will gather on Tuesday
to hear how many U.S. factory jobs General Motors <GM.N> will
cut. GM has until June 1 to work out its issues with creditors
if it is to avoid a bankruptcy filing. []
(Additional reporting by Maytaal Angel; Editing by Sue
Thomas)
