* Gold supported by softer dollar, oil above $72
* Luke-warm ETF buying damps sentiment
* GFMS sees silver hitting $18 this year
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By Kylie MacLellan and Jan Harvey
LONDON, June 11 (Reuters) - Gold held steady in Europe on
Thursday, supported by a weaker dollar and strong oil prices,
but the market was restrained as fund interest in bullion
softened.
Spot gold <XAU=> was bid at $953.90 an ounce at 1440 GMT,
against $953.65 an ounce late in New York on Wednesday.
The market briefly slipped to a session low of $943.10 --
responding to fleeting dollar strength after
stronger-than-forecast U.S. retail sales numbers.
The U.S. currency later fell, making gold cheaper for
non-U.S. investors, as markets concentrated on concerns about a
rising U.S. budget deficit [].
Buying by exchange-traded funds was relatively soft, with
neither the largest gold ETF, the SPDR Gold Trust, or London's
ETF Securities reporting inflows on Wednesday. []
"Investment flows have slowed a little bit," said James
Moore, analyst at TheBullionDesk.com.
"We've still got the background concerns surrounding
inflation but for now the market may need to come a little bit
lower to pick up some fresh demand."
Potential inflationary worries were reflected in oil prices,
with crude now topping $72 a barrel [].
"Whilst the longer term picture is still very supportive for
gold, in the short term the market is overbought and possibly
back to towards the $935, maybe the $925 area before we can pick
up some fresh demand," TheBullionDesk's Moore added.
SOFT DEMAND
Gold buying in the world's largest bullion consumer, India,
remained slow on Thursday, with dealers unwilling to make fresh
purchases as the wedding season nears its end. []
"Lack of physical demand has been one of the main problems
for gold at these prices," said VM Group analyst Matthew Turner.
"It all depends on investment flows so when those dry up it
starts to weaken."
On the supply side, mine output from South Africa fell 13
percent in volume terms in April from a year before, official
data showed. []
Silver <XAG=> rose to $15.31 an ounce from $15.15 late in
New York on Wednesday, while platinum <XPT=> was at $1,259.50 an
ounce against $1,261, and palladium <XPD=> firmed to $254.50
against $253.
Consultant GFMS said silver prices could rise as high as $18
per ounce later this year as investment demand for the precious
metal takes up the slack from falling industrial usage
[].
ETF buying of platinum continued, with ETF Securities
reporting another small inflow of just over 3,000 ounces on
Wednesday. Holdings of the company's ETFS Physical Platinum fund
have risen 42,700 ounces or 14 percent in the last week.
While ETF demand is likely to support platinum, price gains
could be limited by the chilling effect of this on jewellery
buying, one of the only buoyant areas of consumption at a time
when industrial demand for the metal is languishing.
"Further platinum price gains could dampen Chinese jewellery
demand, which could increase the downside risks, as China is the
biggest platinum consumer," Standard Bank said in a note.
(Reporting by Kylie Maclellan and Jan Harvey; Editing by
Veronica Brown)
