* Softer dollar allows gold to rise near $1,090/oz
* Gold, silver ETF holdings fall in New York in January
* ETF Securities' U.S. platinum fund sees 30,000-oz inflow
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 1 (Reuters) - Gold extended gains towards $1,090
an ounce on Monday as the dollar declined further versus the
euro after euro zone manufacturing data beat expectations,
boosting interest in the metal as an alternative asset.
Spot gold <XAU=> was bid at $1,088.70 an ounce at 1415 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 $6.50 to $1,089.50 an ounce.
"Currency movements in the direction we have seen them are
not negative for gold, so that has helped today," said Bank of
America Merrill Lynch analyst Michael Widmer.
"(But) some of the underlying issues that drove the euro
lower are still there," he added. "The PMI from the euro zone
this morning was better than expected so that did help, but the
overall structural issues in the euro zone are still in place."
Stronger-than-expected euro zone PMI data and a slight
tightening in bond spreads pushed the euro higher on Monday, but
it hovered close to seven-month lows on concerns over the
indebtedness of some euro zone countries. []
Widmer said a slight recovery in risk appetite which has
benefited oil and U.S. stock futures and lifted European stocks
and industrial metals from lows was also helping gold to rise.
European shares recovered much of their early decline and
New York stock futures rose in early afternoon trade. Oil prices
turned higher, meanwhile, though the outlook was still clouded
by concerns over the prospects for global growth. [] []
[]
Gold prices remain vulnerable to further losses, however,
after falling 1.6 percent in January, analysts said, with the
dollar's upward trend expected to resume.
"The dollar has been strong, and gold was always going to
struggle on the basis of that," said Citigroup analyst David
Thurtell. "People have been seeking out gold as a currency
hedge, and if that is no longer needed, that is going to cap
some of the demand for gold."
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.
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.
Among other precious metals, silver <XAG=> was at $16.26 an
ounce against $16.16. Platinum <XPT=> was at $1,522 an ounce
versus $1,500, and palladium <XPD=> was at $422 versus $413.
Holdings of ETF Securities' U.S.-based platinum
exchange-traded fund <PPLT.P>, launched last month, rose just
over 30,000 ounces or 14 percent on Friday, the company said.
Barclays Capital analyst Suki Cooper said during a
conference call on Monday that she believes platinum group
metals are set to outperform gold and silver this year.
"The launch of physically backed exchange-traded funds,
coupled with expectations for auto sales to improve... is likely
to bode well for PGMs, while expectations for the dollar to
strengthen... are less positive for gold and silver," she said.
(Editing by Anthony Barker)
