* Softer dollar allows gold to rise above $1,080/oz
* Gold, silver ETF holdings fall in New York in January
* ETF Securities' U.S. platinum fund sees 30,000-oz inflow
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Feb 1 (Reuters) - Gold firmed in Europe on Monday as
the dollar turned lower versus the euro, boosting interest in
the precious metal as an alternative asset, and helping it buck
the downward trend in other commodities like oil and copper.
Prices remain vulnerable to further losses however after
declining 1.6 percent in January, analysts said, with the
dollar's upward trend expected to resume.
Spot gold <XAU=> was bid at $1,083.15 an ounce at 1009 GMT,
against $1,079.20 late in New York on Friday. U.S. gold futures
for February delivery <GCG0> on the COMEX division of the New
York Mercantile Exchange rose $1.00 to $1,084.00 an ounce.
"Gold has done relatively well, looking at what has been
happening in other commodities," said David Thurtell, an analyst
at Citigroup. "The dollar has been strong, and gold was always
going to struggle on the basis of that."
"It is difficult to see the dollar weakening further," he
said. "People have definitely been seeking out gold as a
currency hedge, and if that hedge is no longer needed, that is
going to cap some of the demand for gold."
The dollar edged lower versus the euro on Monday, but the
single currency continued to hover close to seven-month lows
amid concerns over the fiscal health of some euro zone
countries. []
The dollar steadied but stayed close to a six-month high
versus a currency basket after Friday's stronger-than-forecast
gross domestic product data suggested the United States is
recovering faster than the euro zone and Japan.
Weakness in the U.S. unit boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
Among other commodities, oil steadied but traded close to
six-week lows amid fresh concerns over the outlook for global
growth. Industrial metals were under pressure meanwhile from
expectations China may tighten monetary policy. [] []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
ETF HOLDINGS DECLINE
Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD> were unchanged on Friday, but
down 21.7 tonnes or 1.9 percent in January. []
Holdings of the biggest silver ETF, the iShares Silver
Trust, also declined 1.1 percent or 107.99 tonnes last month.
Analysts said outflows from precious metals ETFs could undermine
prices if they persist.
In India, historically the world's biggest gold consumer,
demand for the metal abated on Monday as the rupee weakened
versus the dollar after buying picked up in January when traders
stocked in anticipation of wedding demand. []
Analysts said with consumption weak, gold prices were
looking vulnerable to a further correction if the dollar
strengthened further.
"Speculators and retail investors are still reluctant to
re-enter the market, having booked profits during the latest
correction," said VTB Capital analyst Andrey Kryuchenkov. "The
market was barely clinging to key support above $1,082/1,080."
"However a stronger dollar from here could well push gold
prices back towards $1,060, with our worst case scenario still
suggesting losses to $1,026," he added.
Among other precious metals, silver <XAG=> was at $16.26 an
ounce against $16.16. Platinum <XPT=> was at $1,514 an ounce
versus $1,500, while palladium <XPD=> was flat at $413.
Holdings of ETF Securities' U.S.-based platinum
exchange-traded fund <PPLT.P> rose just over 30,000 ounces or 14
percent on Friday, the company said.
"The launch of physically backed ETFs in the U.S. saw record
inflows into both platinum and palladium last month with
approximately 192,000 ounces of platinum and 340,000 ounces of
palladium added," said TheBullionDesk.com analyst James Moore.
(Editing by James Jukwey)
