* Bullion moves back towards 5-wk high on talk of ETF buying
* Dollar firms, reversing earlier losses
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, May 13 (Reuters) - Gold rose on Wednesday, climbing
back towards the five-week high it touched earlier in the
session, as talk of exchange-traded fund buying after New York
markets opened boosted interest in the metal.
Spot gold <XAU=> earlier touched a peak of $928.30 an ounce,
its firmest since April 2, and was bid at $926.35 an ounce at
1450 GMT, against $921.85 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 $3.60 to
$927.50 an ounce.
"At the opening of stocks in New York, we heard some buying
went through on the ETF, so gold started picking up again," said
Afshin Nabavi, head of trading at MKS Finance in Geneva. "We
also saw some short covering pushing it up."
Demand for precious metals from exchange-traded funds, which
issue securities backed by physical stocks of metal, has been a
key factor supporting prices in the last year.
Holdings of the world's largest ETF, New York's SPDR Gold
Shares <GLD>, were steady at 1,104.09 tonnes as of Tuesday.
[]
Gold managed to shrug off gains in the dollar, which
recovered lost ground after slipping to a four-month low against
a basket of currencies and a seven-week trough versus the euro
earlier. []
Like all dollar-priced commodities, gold becomes cheaper for
holders of other currencies as the U.S. unit weakens.
Its relationship with the dollar is particularly strong,
however, as it is also often bought as an alternative asset to
the currency and a hedge against rising prices.
Underlying demand for gold remains relatively lacklustre.
Dealers say bullion buying in India, the world's biggest gold
consumer, is sluggish at higher prices. []
APPETITE
Commodities such as oil and base metals as well as gold have
risen, however, on the weaker dollar and hopes the economic
downturn may be bottoming out. []
"Investment in commodities is growing," said broker MF
Global in a note. "The rise in interest explains the ability of
commodity markets such as gold and oil to remain relatively
strong despite disappointing fundamental news."
But doubts over the health of the global economy linger.
U.S. retail sales dipped and euro zone industrial output dived
on Wednesday, while the Bank of England said Britain needed a
long period of healing. []
Elsewhere, spot silver <XAG=> eased to $14.10 an ounce
against $14.19, platinum <XPT=> was bid at $1,116.50 an ounce
against $1,130, while spot palladium <XPD=> was bid at $228.50
an ounce against $232.50.
The autocatalyst materials suffered last year from a fall in
demand, as the economic slowdown knocked car sales. Hopes the
downturn may be bottoming out has taken some downward pressure
off the market, although bad news is still emerging.
"Although we are bullish on the platinum group metals, a
sustained rally may be difficult to achieve without a modest
recovery in auto demand," said HSBC in a note.
(Editing by Keiron Henderson)
