* ISM survey highlights potential price pressures
* Gold, silver ETF holdings fall in New York in January
* ETF Securities' U.S. platinum fund sees 30,000-oz inflow
(Recasts, adds comment/detail)
By Jan Harvey
LONDON, Feb 1 (Reuters) - Gold hit session highs on Monday
as the market fretted about rising price pressures after data
showed manufacturing in the United States grew at a faster than
expected rate.
Spot gold <XAU=> was bid at $1,095.80 a troy ounce at 1548
GMT compared with an earlier high of $1,097.55 and 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 were up $13.30 at
$1,096.30 an ounce.
The Institute for Supply Management said its index of
national factory activity rose to 58.4 in January from 54.9 in
December and the prices component rose to 70 from 61.5.
[] []
"The ISM manufacturing number was good, there is the
suggestion of inflationary pressures coming through," said Robin
Bhar, analyst at Calyon.
Investors use gold as a hedge against inflation, which
erodes wealth, while a higher dollar makes commodities more
expensive for holders of other currencies. []
Analysts said some recovery in risk appetite has benefited
oil and U.S. and European stocks, which all rose after the ISM
data. [] [] []
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.
"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 $16.41 an
ounce against $16.16. Platinum <XPT=> was at $1,525 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.
(Additional reporting by Pratima Desai; Editing by Sue Thomas)
