* Equities rise in Europe, Asia; world stocks hit 4-mth high
* Dollar recovers from 1-month low vs the euro
(Releads, adds comment, updates prices)
By Jan Harvey
LONDON, May 5 (Reuters) - Gold rose nearly 1 percent on
Tuesday as the dollar wilted against the euro, and amid
uncertainty ahead of the European Central Bank's rate setting
decision and the result of U.S. bank stress tests later this
week.
Spot gold <XAU=> was bid at $911.70 an ounce at 1202 GMT,
against $902.35 an ounce late on Monday.
The dollar's weakness against the euro, which rose to a
one-month high against the U.S. currency, has helped prices to
break out their earlier range.
"The dollar has been one of the main supports to gold over
the last few days," said Calyon metals analyst Robin Bhar.
"This week's ECB meeting... will obviously have an impact on
the dollar/euro rate, and could therefore have an impact on
gold," he added. "There is a lot of uncertainty out there at the
moment -- there are the bank stress tests as well."
The U.S. government has assessed 19 major U.S. banks to
ensure they have sufficient capital to withstand the recesssion:
the results are expected on Thursday. []
The dollar's slide to a one-month low against the euro on
Tuesday is boosting gold's appeal as an alternative asset.
Firmer global shares are adding to the view that the worst of
the economic downturn may have passed. []
Gains in the stock markets are limiting gold's gains,
however. European shares were at 16-week highs on Tuesday,
suggesting appetite for assets seen as riskier is sharpening.
[]
Investment in the precious metal through gold-backed
exchange-traded funds remains relatively lacklustre. Holdings of
the largest gold ETF, SPDR Gold Shares <GLD>, were unchanged on
Monday for the seventh consecutive session.
In Europe, London's ETF Securities said holdings of its
three gold-backed ETFs firmed 0.5 percent week-on-week to 7.432
million ounces on Monday, while Zurich Cantonal Bank's gold ETF
holdings rose 4.5 percent on Monday from April 1. []
ECB
Analysts say the market is looking ahead to the ECB's
announcement on rates and the result of stress tests on U.S.
banks, both due on Thursday. []
If banks need more capital to deal with weakness in the
financial system, risk aversion is likely to return, boosting
the appeal of gold, analysts said. []
Elsewhere, Turkey said its gold imports declined in April to
25.698 kilos, against 40 kilos in March. Year-on-year, they were
down 97.5 percent from 1,030 kilos. []
A sharp rise in the amount of scrap jewellery entering the
market has curbed demand for gold from outside Turkey.
Meanwhile, spot silver <XAG=> tracked gold higher, and was
bid at $13.29 an ounce against $13.01.
Among other precious metals, platinum <XPT=> was bid at
$1,124.50 an ounce, unchanged from the level it reached late on
Monday, while palladium <XPD=> was bid at $221 an ounce against
$218.
Both metals have been battered by a spate of bad news from
the car industry, their main consumer. However, platinum in
particular has seen new demand from investors as they take
advantage of lower prices to buy into the metal.
Zurich Cantonal Bank's platinum-backed ETF saw inflows of
9,522 ounces between April 1 and Monday, lifting its total
holdings of the metal 5.9 percent to 170,322 ounces, it said.
"(Platinum) has touched $1,128 overnight but is likely to
remain volatile in the short-term as traders assess the impact
of slowing auto sales and fresh investment demand," said James
Moore, an analyst at The BullionDesk.com.
(Editing by Keiron Henderson)
