* Dollar pares gains after Trichet comments on euro zone
* U.S. non-farm payrolls also in focus
* SPDR ETF dips; ETFS silver, palladium assets hit records
(Releads, updates prices)
By Jan Harvey
LONDON, June 4 (Reuters) - Gold bounced to new session highs
on Thursday as the dollar pared its gains versus the euro after
European Central Bank chief Jean-Claude Trichet said economic
activity would decline less in the second half of 2009.
The precious metal had briefly turned lower as the dollar
firmed following the ECB's decision to leave rates on hold, but
bounced back to a high of $974.60 an ounce as the dip met with
strong buying interest, dealers said.
Spot gold <XAU=> was bid at $971.20 an ounce at 1404 GMT,
versus $962.15 an ounce late in New York on Wednesday. U.S. gold
futures for June delivery <GCM9> on the COMEX division of the
New York Mercantile Exchange rose $6.60 to $971.10 an ounce.
"Gold dipped, but then rebounded as it tracked the EUR/USD
(euro-dollar exchange rate)," said David Thurtell, an analyst at
Citigroup.
"The EUR/USD is rallying as Trichet signals that the worst
of the recession has passed," he said. "European growth
prospects are therefore looking positive, which should continue
to attract money to the region."
The euro reduced its earlier losses against the dollar in
volatile trading as Trichet's comments did little to change
expectations for interest rates in the euro zone in the future.
[]
Any new dollar weakness could prompt more buying of gold as
an alternative asset, and will make dollar-priced commodities
cheaper for holders of other currencies.
"We would expect gold's inverse correlation to the dollar to
remain strong, while its correlation to the stock markets will
start weakening from now on," VTB Capital said in a note.
European shares rose in afternoon trade, after weakening in
the wake of the ECB decision. [] [].
The market also looked ahead to U.S. non-farm payrolls data
on Friday for its impact on the currency markets.
"If this comes in lower than expectations, I expect we will
see some downward pressure on gold," said David Wilson, a metals
analyst at Societe Generale.
Oil meanwhile rose towards $68 a barrel after U.S. jobs data
showed a fall in jobless claims. Rising crude prices help boost
interest in commodities as an asset class. []
INVESTMENT DEMAND
On the investment side, holdings of the world's largest
gold-backed exchange-traded fund, New York's SPDR Gold Trust,
posted a small 1.5-tonne fall on Wednesday. []
The three gold-backed ETFs operated by London's ETF
Securities added 36,655 ounces of bullion to their reserves that
session. But gold demand from India, the world's biggest bullion
consumer, was sluggish as prices stayed high. []
Silver <XAG=> was $15.45 an ounce against $15.30, tracking
moves in the gold market.
Platinum <XPT=> was at $1,252.50 an ounce versus $1,233.50,
while palladium <XPD=> was $245.50 against $240.50, both
benefiting from fund buying. ETF Securities said its silver and
palladium ETF holdings both hit record levels on Wednesday.
[]
Platinum refiner Johnson Matthey warned its profits and
sales would fall over the coming months as the world car
industry continued to struggle. []
Goldman Sachs, however, said U.S. auto sales were likely to
improve in the second half of 2009. []
(Editing by Anthony Barker)
