* Soft dollar helps gold but weak physical demand caps rise
* Oil falls more than $1 a barrel as U.S. inventories rise
* S. Africa union plans strike at power utility Eskom
(Updates prices, quotes)
By Jan Harvey and Catherine Bosley
LONDON, Aug 5 (Reuters) - Gold prices edged below $960 an
ounce on Wednesday as equities fell and the dollar steadied
against a basket of currencies after weaker than expected U.S.
economic data, and as oil prices fell.
Gold's dip also brought platinum and palladium down from the
multi-month highs they hit earlier in the session amid threats
to supply from major producer South Africa.
Spot gold <XAU=> was bid at $962.20 an ounce at 1504 GMT,
against $966.75 an ounce late in New York on Tuesday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange fell $4.90 to $956.00 an ounce.
Precious metals eased as the dollar recovered losses against
the euro, after ISM non-manufacturing data showed the U.S.
service sector contracted faster than expected in July, boosting
interest in the U.S. unit as a haven from risk. []
"Gold right now is being traded based on what the stock
market and the dollar are doing," said Tom Hartmann, a trader at
Altavest. "It's no surprise that gold's down."
"It's a little disappointing to see the (ISM) numbers fall
back from June, indicating perhaps the path out of this
recession is not going to be so cut and dried."
Weakness in the U.S. currency had encouraged more investors
to move into hard assets such as bullion, as well as making
dollar-priced commodities cheaper to other currency holders.
Equities in Europe and on Wall Street slipped after the ISM
data, which raised concerns over recovery in the world's largest
economy. [] []
Oil fell more than $1 a barrel as data showed U.S. crude
stocks rose last week. Gold, which can be bought as a hedge
against oil-led inflation, often tracks crude prices. []
HOLDINGS STEADY
On the demand side, gold buying by ETFs, which issue
securities backed by physical stocks of metal, remains weak. New
York's SPDR Gold Trust <GLD>, the largest gold ETF, said its
holdings were steady for a fourth day on Tuesday. []
Among other precious metals, silver <XAG=> was at $14.67 an
ounce against $14.61 on Tuesday.
Platinum and palladium, which earlier this week were boosted
by positive July car sales data, rose on news unions in South
Africa were planning a strike at power utility Eskom [].
The National Union of Mineworkers, South Africa's biggest
union, said it plans to strike next week after rejecting a wage
offer, raising the threat of power disruptions that could
disrupt metals production. []
Leon Esterhuizen, an analyst with RBC Capital Markets in
London, said he thought the strike would not have an immediate
impact on supply, as most producers had large platinum stocks.
He said a large price rise would only be justified if the
strike was protracted. "You must be banking on the potential
that the strike could be longer than expected," he said.
Spot platinum <XPT=> hit a high of $1,290 an ounce on
Wednesday, its firmest since June 6, but later declined to
$1,263 an ounce against $1,265.50. Palladium <XPD=> rose to a
new 11-month high of $281, and was at $275 against $274.50.
(Editing by Sue Thomas)
