* Euro slips versus the dollar, erasing earlier gains
* European shares extend gains, Wall Street opens higher
(Releads, updates prices)
By Jan Harvey
LONDON, May 6 (Reuters) - Gold was firmer on Wednesday as
traders worried about the outlook for the financial sector ahead
of the results of U.S. bank stress tests on Thursday, although
it dipped from highs as the euro fell versus the U.S. currency.
Spot gold <XAU=> was bid at $907.40 an ounce at 1450 GMT,
against $903.20 an ounce late in New York on Tuesday. U.S. gold
futures for June delivery <GCM9> on the COMEX division of the
New York Mercantile Exchange rose $4.70 to $909.00 an ounce.
"The market is thinking that tomorrow's news on bank (stress
tests) ought to be negative for the U.S. dollar, therefore
positive for gold," said Afshin Nabavi, head of trading at MKS
Finance.
The dollar fell against the euro in earlier trade after U.S.
data showed the United States shed fewer jobs than expected last
month, lifting gold to a high of $912.25 an ounce. It later
reversed those losses as the single currency slipped.
Gold is often bought as an alternative to the U.S. currency
and tends to move in the opposite direction to it. []
Investors are awaiting the outcome of U.S. bank stress
tests after news that Bank of America may need as much as $34
billion in extra capital. []
They are also eyeing key U.S. economic data and a rates
announcement from the European Central Bank on Thursday.
Societe Generale analyst David Wilson said gold's gains were
being limited by perceptions that the worst of the global
economic downturn may be over.
He said equity markets' ability to shake off weaker than
expected U.S. GDP data last week and more positive economic news
from China was boosting appetite for assets typically seen as
riskier, such as stocks.
"The increasing amount of non-negative economic news is
driving investors to look more favourably at equities, and even
base metals, and obviously that is going to be to the detriment
of gold," he said.
"As more positive economic signals appear, there will be
less incentive to hold gold as a safe haven play."
European shares rose for a sixth straight session on
Wednesday as a number of encouraging corporate results added to
views that the recession is easing. []
Wall Street stocks also posted gains. []
NEAR HIGH
Silver prices tracked gold up to a six-week high of $13.78
an ounce. Data showed ETF Securities' Physical Silver
exchange-traded fund <PHAG.L> added nearly 200,000 ounces to its
reserves on Tuesday.
But holdings of the world's largest silver-backed ETF, the
iShares Silver Trust <SLV>, dipped for the first time in more
than a month, by just over 3.5 tonnes.
"The gains yesterday led the gold/silver ratio to its lowest
in over seven months, with the industrial metal looking more
positive from a technical view, having broken through its
February trendline," TheBullionDesk.com analyst James Moore
said.
"The target now is for silver to hold ground above $12.80
and to challenge overhead resistance from March highs around
$13.90 and February highs around $14.64," he added.
Silver <XAG=> rose to $13.76 an ounce against $13.34.
Among other precious metals, spot platinum <XPT=> was bid at
$1,128 an ounce against $1,125.50, while spot palladium <XPD=>
was bid at $225 an ounce against $218.50.
(Editing by Sue Thomas)
