* Dollar pares gains after Trichet comments on euro zone
* Oil heads back above $68 a barrel
* SPDR ETF dips; ETFS silver, palladium assets hit records
(Releads, updates prices)
By Jan Harvey
LONDON, June 4 (Reuters) - Gold climbed on Thursday as the
dollar gave up its earlier gains versus the euro and oil rose
above $68 a barrel, stoking fears of inflation.
The metal briefly turned lower as the dollar firmed after
the European Central Bank's decision to leave rates on hold, but
rebounded as the dip met strong buying interest, dealers said.
Spot gold <XAU=> was bid at $977.05 an ounce at 1510 GMT,
versus $962.15 an ounce late in New York on Wednesday, having
earlier risen as high as $978.00.
U.S. gold futures for June delivery <GCM9> on the COMEX
division of the New York Mercantile Exchange rose $13.30 to
$977.80 an ounce.
"Gold dipped, but then rebounded as it tracked the EUR/USD
(euro-dollar exchange rate)," David Thurtell, an analyst at
Citigroup, said.
"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 cut its earlier losses against the dollar in
volatile trading as Trichet's comments did little to change
expectations for future interest rates in the euro zone. []
Fresh dollar weakness may prompt buying of gold as an
alternative, and will make dollar-priced commodities cheaper for
holders of other currencies.
Oil rose above $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, and can prompt fresh gold
buying to hedge against oil-led inflation. []
"Inflation fear will be the driver (of gold) for a long
time," one European gold trader said.
STOCKS RISE
On other markets, European shares rose in afternoon trade,
after weakening in the wake of the ECB decision, while U.S.
stocks were little changed. [] [].
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 $15.66 an ounce against $15.30, tracking
moves in the gold market.
Platinum <XPT=> was at $1,271.50 an ounce versus $1,233.50,
while palladium <XPD=> was $248.50 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 Sue Thomas)
