* Inflation concerns lift gold, precious metals
* U.S. producer prices rise more than expected in June
* Physical gold demand lackluster, India imports fall
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, July 14 (Reuters) - Gold futures ended
slightly higher on Tuesday, as a greater-than-expected increase
in U.S. producer prices and retail sales in June boosted
bullion's appeal as an inflation hedge.
The metal has been weighed down by the prospect of
deflation, or a downward spiral in prices, because of worries
about a prolonged economic slowdown.
Gold has held key support above $900 an ounce but lost
nearly $20 to reach a two-month low last week amid a lack of
inflation-hedge and risk aversion demand.
Gold recouped part of last week's losses as sharp gains on
Wall Street on Monday sparked a technical rally, and traders
said that the metal market will continue to take the lead from
the U.S. equities market.
"It's important to see what the stock market does. If the
financials really break out to upside and drag stock prices
higher, that will take some steam out of commodities in
general," said Bill O'Neill, managing partner of New
Jersey-based LOGIC Advisors.
U.S. August futures <GCQ9> settled up 30 cents at $922.80
an ounce on the COMEX division of the New York Mercantile
Exchange.
Spot gold <XAU=> traded at $925 an ounce at 3:27 p.m.,
against $920 of its previous session finish.
"(Gold) fell last week on commodities liquidation, but held
above $900, which is good," said Simon Weeks, head of precious
metals at the Bank of Nova Scotia. "Now buyers are back as they
focus on an alternative to currencies."
A burst of confidence in U.S. financial stocks lifted
global equities on Tuesday, while a strong set of earnings from
Goldman Sachs <GS.N> further lifted sentiment. []
The consensus-beating rise in the U.S. PPI, twice as big as
expected, is also reigniting fears over rising inflation,
against which gold is often bought as a hedge. June's producer
prices rose 1.8 percent. []
Buying of physical gold remained lackluster, however. India
imported 11.6 tonnes of gold in June, down 52 percent from 24
tonnes a year ago - the head of Bombay Bullion Association.
[]
ETF FLAT
On the investment side, holdings of the main gold
exchange-traded fund, the SPDR Gold Trust <GLD>, were flat for
a third session on Monday. []
In supply news, workers in South Africa's gold sector
rejected a wage hike offer by gold producers, and vowed to
escalate the dispute. []
South Africa's National Union of Mineworkers said a strike
in the gold sector was "highly likely" after the rejection.
Silver <XAG=> recovered from the previous session's 10-week
low to rise in gold's wake. Silver <XAG=> was at $12.89 an
ounce against $12.82.
Nontheless, "silver looks very weak, with a potential move
back towards strong support at $12.00," said VTB Capital
analyst Andrey Kryuchenkov in a note.
Platinum <XPT=> was at $1,125 an ounce against $1,110,
while palladium <XPD=> was at $240.50 against $233.
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCQ9> 922.80 0.30 0.0 884.30 4.4
US silver <SIN9> 12.855 0.070 0.5 11.295 13.8
US platinum <PLN9> 1128.40 17.30 1.6 941.50 19.9
US palladium <PAU9> 243.85 8.70 3.7 188.70 29.2
Prices at 3:37 p.m. EDT (1937 GMT)
Gold <XAU=> 924.75 4.75 0.5 878.200 5.3
Silver <XAG=> 12.89 0.07 0.5 11.30 14.1
Platinum <XPT=> 1125.00 15.00 1.4 924.50 21.7
Palladium <XPD=> 240.50 7.50 3.2 184.50 30.4
Gold Fix <XAUFIX=> 924.75 16.25 1.8 836.50 10.5
Silver Fix <XAGFIX=> 12.880 0.410 3.3 14.760 -12.7
Platinum Fix <XPTFIX=> 1129.00 0.00 0.0 1529.00 -26.2
Palladium Fix <XPDFIX=> 237.00 0.00 0.0 365.00 -35.1
