* U.S. currency awaits direction from G8 meeting
* Oil prices slip towards $72/barrel
(Updates throughout, previous TOKYO)
By Jan Harvey
LONDON, June 12 (Reuters) - Gold prices edged lower in
Europe on Friday as a stronger dollar dented interest in the
precious metal as a currency hedge, and oil prices eased.
Most commodities priced in dollars have lost value as the
U.S. currency firmed, as they become more expensive for holders
of other currencies.
Spot gold <XAU=> was bid at $950.20 an ounce at 0900 GMT,
against $954.00 an ounce late in New York on Thursday.
"A stronger dollar, oil coming off the highs," said Calyon
metals analyst Robin Bhar. "We are tied to the dollar and how
that fares."
"We have yet to reclaim the $960 level so I think as gold
remains below that, there is always a risk of a move back
towards the $930-$940 level, where there is strong support."
The dollar rose against a basket of major currencies, with
traders awaiting a G8 finance ministers' meeting later in the
day. The dollar index <.DXY> is still below its high this week
of 81.47, hit on Monday, however. []
A retreat in oil prices also relieved some of the upward
pressure from gold prices. Crude futures slid towards $72 a
barrel as investors locked in gains from a near eight-month high
settlement the previous day. []
Gold has historically tracked oil prices, as it is often
bought as a hedge against rising inflation.
On the wider markets, a rise in European equity markets
after Asian shares climbed to new 2009 highs on the back of
gains in Chinese industrial output and rising U.S. retail sales
diverted some investment from bullion.
STATIC
Fresh demand for physical gold was lacklustre. Holdings of
the SPDR Gold Trust, the world's largest bullion exchange-traded
fund, were static for a fourth session on Friday. []
Meanwhile gold buying in India, the world's biggest bullion
consumer last year, declined, with appetite for the precious
metal receding as the wedding season tails off. []
Asset manager Fortis Investments told Reuters it favours
gold as a longer-term play on both inflation and deflation. Gold
is seen as an asset that holds its value in volatile times.
[]
But with physical demand lacklustre, gold is struggling to
break out of its established range.
"It is getting increasingly tough (for gold) to hold on to
its gains beyond $965-966 levels," said Pradeep Unni, senior
analyst at Richcomm Global Services, in a note.
Repeated failures to break and hold above this level has
triggered a sell-off in the market which has resulted in a slide
to the $943-$944 zone, he said.
"Gold seems to have been sandwiched between these levels and
as long as it trades in the same pattern, an immediate trend
would be difficult to discern," he added.
Among other precious metals, silver <XAG=> was at $15.15 an
ounce against $15.37. Platinum <XPT=> was at $1,254.50 an ounce
against $1,261, while palladium <XPD=> was at $253 against $254.
(Editing by James Jukwey)
