* Gold turns higher on bargain hunting after weakness
* Lack of imminent inflation weighs down on bullion
* Investment demand lagging as GLD holdings fall
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang
NEW YORK, July 7 (Reuters) - Gold futures ended higher on
Tuesday as investors snapped up bargains following their recent
price weakness, but oil's extended decline lessened inflation
worries, limiting further gains in the metal.
A combination of weakened investment demand and slowing
gold jewelry buying has weighed heavily on bullion after it
rose toward $1,000 an ounce in early June because of inflation
worries following massive economy stimulus plans by central
banks.
Miguel Perez-Santalla, vice president of sales of Heraeus
Precious Metals Management in New York, said that the precious
metals complex in general strengthened on Tuesday due to the
dollar weakness.
However, "inflation has not showed, and people are getting
impatient of having their money are sitting in the metal doing
nothing," Perez-Santalla said.
U.S. August futures <GCQ9> settled up $4.80 at $929.10 an
ounce on the COMEX division of the New York Mercantile
Exchange.
Spot gold <XAU=> traded at $927.85 an ounce at 2:36 p.m.
EDT (1836 GMT) against $924.00 an ounce late in New York on
Monday, having earlier touched a high of $931.55.
Gold climbed on Tuesday as a sharply weaker equities
markets prompted investors to switch funds into the hard asset
precious metal sector.
The metal also rose in spite of a higher dollar. Investors
recently preferred the U.S. currency to bullion as a safe store
of value amid fears over the economic outlook.
U.S. crude oil futures <CLc1> extended the previous
session's losses, falling toward $62 a barrel on economic
worries.
Oil's recent decline failed to boost gold as a hedge
against inflation, traders said.
The market is looking for any comments on the dollar's role
as the global reserve currency at the Group of Eight leaders'
meeting starting on Wednesday, which could impact on the
foreign exchange markets and consequently on gold.
TECHNICALS, INVESTMENT DEMAND WEAKEN
Technically, the picture is looking weaker, with gold's
trade down through the 100-day moving average opening up the
potential for a move down to $915, Weeks added.
Investment demand remained relatively soft, with holdings
of the largest gold-backed exchange-traded fund, the SPDR Gold
Trust <GLD>, falling 0.36 tonnes on Monday. []
Switzerland's Zurich Cantonal Bank, however, reported
modest inflows into its gold and silver ETFs last week.
[]
Physical demand for bullion bars has improved slightly in
the last week or so, dealers say, but is far from its peak.
"Investment demand for gold has stalled, and that has been
the key support for gold for much of the first half," said
David Wilson, metals analyst at Societe Generale.
Among other precious metals, silver <XAG=> was at $13.18 an
ounce against $13.24. Platinum <XPT=> was at $1,134.50 an ounce
against $1,143, while palladium <XPD=> stood at $239.50 against
$239.
Both platinum group metals have suffered from the downturn
in the car industry, their main consumer. Any sign of a
recovery in the sector could trigger a turnaround, analysts
said.
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCQ9> 929.10 4.80 0.5 884.30 5.1
US silver <SIU9> 13.220 -0.018 -0.1 11.295 17.0
US platinum <PLV9> 1135.80 -11.20 -1.0 941.50 20.6
US palladium <PAU9> 240.50 -2.15 -0.9 188.70 27.5
Prices at 2:36 p.m. EDT (1836 GMT)
Gold <XAU=> 927.85 3.85 0.4 878.200 5.7
Silver <XAG=> 13.18 -0.06 -0.5 11.30 16.6
Platinum <XPT=> 1134.50 -8.50 -0.7 924.50 22.7
Palladium <XPD=> 239.50 0.50 0.2 184.50 29.8
Gold Fix <XAUFIX=> 924.00 -0.50 -0.1 836.50 10.5
Silver Fix <XAGFIX=> 13.320 0.290 2.2 14.760 -9.8
Platinum Fix <XPTFIX=> 1143.00 0.00 0.0 1529.00 -25.2
Palladium Fix <XPDFIX=> 242.00 0.00 0.0 365.00 -33.7
------------------------------------------------------------
Prices in dollars per ounce.
2008 close for U.S. gold second contract month, U.S. silver and
palladium third contract months and U.S. platinum fourth
contract month.
(Additional reporting by Jan Harvey in London; Editing by
Christian Wiessner)
