* Gold eases as dollar firms, traders take profits
* Oil prices hold above $140 ahead of U.S. stocks data
* Traders eye ECB rates decision on Thursday
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, July 2 (Reuters) - Gold eased on Wednesday as the
dollar firmed against the euro, prompting profit-taking after
the previous session's 10-week high.
Gold <XAU=> slipped to $934.50/935.50 an ounce at 1015 GMT
from $938.40/939.40 late in New York. It rallied to a high of
$945.80 an ounce on Tuesday, its strongest since April 18.
"The dollar is stronger, and that is helping along some
profit-taking on gold," said Michael Widmer, an analyst at
Lehman Brothers.
Gold typically moves in the opposite direction to the dollar
as it is often bought as a currency hedge. Dollar-priced gold
also becomes cheaper for holders of other currencies when the
greenback is soft.
The dollar slipped to a two-month low against the euro on
Wednesday, as traders counted on a hike in euro zone interest
rates from the European Central Bank on Thursday.
The ECB is expected to raise rates a quarter-point to 4.25
pct in a bid to fight inflation. []
"HSBC currency analysts expect the ECB to raise rates...
which in combination with generally good euro zone economic data
is supporting the EUR/USD and by extension boosting gold
prices," said HSBC analyst James Steel in a note.
"The euro zone-U.S. two-year spread remains at 196 basis
points, which according to HSBC currency analysts is
consistent with a firm EUR/USD," he added.
"(They) warn, however, of a possible correction in the
EUR/USD after the announcement of the ECB rate decision."
Gold has bounced more than 7 percent, since falling to a
one-week low at $873.50 an ounce last week, mainly driven by
rising oil prices.
Higher oil prices tend to benefit gold, as they stoke
concerns over inflation -- against which gold is bought as a
hedge -- as well as increasing the appeal of commodities as a
whole.
Oil steadied on Wednesday, holding above $140 on forecasts
that global supply will struggle to keep pace with demand as
well as on tensions between Israel and Iran. []
Traders will be watching U.S. oil inventory data due to be
released at 1430 GMT for clues as to the next move in oil, which
could influence gold.
"Today's key gold market event will be the weekly release of
US oil stats," said UBS analyst John Reade.
"The argument about summer crude strength is based on low
imports and falling crude inventories so any disappointment
there could see oil under pressure."
Among other precious metals, silver <XAG=> inched down to
$17.95/18.02 an ounce from $18.08/18.13 late in New York on
Tuesday, when it rallied as high as $18.19, its loftiest level
since May 27.
Spot platinum <XPT=> slid to $2,058.50/2,078.50 an ounce
from $2,069.00/2,089.00 late in New York.
Spot palladium <XPD=> was little changed at $466.00/471.00
an ounce from $464.00/472.00 an ounce.
(Reporting by Jan Harvey: Editing by Peter Blackburn)
