* Gold slides 1 pct as dollar firms, oil retreats
* Platinum falls to 1-mth low on fears over sliding demand
* ETF Securities Physical Gold ETF holdings rise 15 pct
(Recasts, updates prices, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, July 7 (Reuters) - Gold slipped 1 percent in Europe
on Monday as the dollar firmed to a one-week high amid
expectations the European Central Bank will not raise interest
rates further and oil prices eased more than $2 a barrel.
Gold <XAU=> fell to $920.70/921.70 an ounce at 1021 GMT from
$932.00/933.00 an ounce in London on Friday when the U.S.
markets were closed for Independence Day holiday.
The precious metal hit good support at its session low just
above $918, but could be vulnerable to further weakness.
"The euro is a bit weaker, the dollar is stronger and the
oil price is slipping a bit," said Commerzbank analyst Eugen
Weinberg. "But also we are seeing that the equity markets are in
better shape."
"There has been a strong negative correlation between the
gold price and the equity markets," he added. "Risk aversion has
led to an inflow into gold, so higher equity markets could see a
lower gold price."
With equities now see-sawing, any further recovery could
pressure gold.
The dollar is also bouncing higher, striking a one-month
high against a basket of currencies on Monday morning.
[]
Investors were cheered by last week's better-than-expected
U.S. jobs data, and are now looking ahead to comments this week
from Federal Reserve Chairman Ben Bernanke.
A firmer dollar typically pressures gold, which is bought as
an alternative investment to the U.S. currency. A stronger
greenback also makes dollar-priced commodities such as precious
metals more expensive for holders of other currencies.
Oil prices also weakened in response to a firming dollar,
adding pressure to gold, which is often bought as a hedge
against oil-led inflation.
Crude fell below $143 a barrel, although losses were limited
by concerns about the ongoing dispute between Iran, the world's
fourth largest oil exporter, and the West over the Islamic
Republic's nuclear programme. []
While in the short term weaker oil prices are pressuring
gold, in the longer run near-record crude prices are seen as a
major supportive factor for the precious metal.
"Oil prices at these levels should anchor precious metal
investment demand as investors seek portfolio protection against
rising global inflation expectations," said Standard Bank
analyst Manqoba Madinane in a note.
In fundamental news, London-based ETF Securities said the
amount of gold it holds to back its Physical Gold
exchange-traded fund has risen 15 percent in the last week to a
record 1.459 million ounces.
The rise reflected gains across its physically backed
precious metals ETFs, with its platinum and palladium holdings
also rising to new records and silver ticking up 1 percent.
[]
Platinum group metals prices are also sliding, with platinum
shedding 1.5 percent to a one-month low and palladium just under
1 percent weaker, as investors took profits after the metals'
recent gains, amid fears demand may slacken.
The PGMs are chiefly used in the manufacture of
autocatalysts. Investors fear that falling car sales as the U.S.
ecoonomy falters could hit PGM consumption hard.
"Fears over weaker auto demand impacting PGM demand, as well
as weaker gold prices, have pulled down platinum," said Fairfax
investment bank analyst John Meyer.
"Despite the weaker pricing, producers remain under
considerable pressure due to the power shortages in South
Africa," he added.
Lonmin, the world's number three platinum producer, has
reopened a smelter it closed last week for repairs, taking some
support from platinum prices.
The company said it will lose 5,000-10,000 ounces of refined
platinum sales due to the shutdown. []
Spot platinum <XPT=> hit a low of $1,967.50 an ounce, its
weakest level since June 5. It later recovered to trade at
$1,977/1,997, down from $1,999.00/2,019.00 in London.
Platinum has lost 13 percent in value since hitting a record
of $2,290 in March. The metal, also used in jewellery, had
rallied after a power crisis in main producer South Africa
disrupted mining and sparked fears of a supply deficit.
Spot palladium <XPD=> slipped to $446.50/454.50 an ounce
from $450.00/455.00 an ounce, while silver <XAG=> dropped to
$17.87/17.93 an ounce from $18.02/18.12 late in London -- well
below an 11-week high of $18.46 hit last week.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
