* Gold climbs as dollar softens, oil steadies
* Weaker equities encourage diversification into gold
* Platinum bounces from 1-mth low as supply fears bite
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, July 8 (Reuters) - Gold climbed in Europe on Tuesday
as the dollar softened, oil steadied and a slide in equities
sparked buying of the metal as an alternative investment.
Spot gold <XAU=> rose to $929.20/930.20 an ounce at 0931 GMT
from $925.15/926.35 an ounce late in New York on Monday.
The precious metal fell as low as $914.50 an ounce on
Monday, its weakest level since June 27, in line with a broader
commodities sell-off as oil slipped more than $4 a barrel.
A softer dollar however encouraged buying of the precious
metal as a currency hedge. []
A dip in European equities after a dismal session in Asia is
also boosting sentiment towards gold. []
"Commodity markets (are) performing strongly, as opposed to
poorly performing equity markets," said Calyon metals analyst
Robin Bhar.
"(The money coming out of equities) has to go somewhere. It
is prudent to employ some of that in commodities, and more
specifically in the gold market."
European stocks extended an early fall to slide more than
2.5 percent on Tuesday, led by banking shares, on fears of
further losses in the sector.
ETF BUYING
Strong investor inflows into ETF funds show sentiment
towards gold remains strong, said Bhar.
London's ETF Securities said on Monday that the amount of
gold held to back its physical gold ETF rose 15 percent last
week, while gold holdings at New York's SPDR Gold Trust edged up
0.1 percent to 658.99 tonnes on Monday. []
"(ETFs are) proof that people are diversifying into precious
metals and into gold specifically," Bhar said.
However, the jewellery market remains under pressure. James
Steel at HSBC said gold imports into India, the world's leading
buyer of gold jewellery, slumped 67.6 percent in June to 24
tonnes from 74 tonnes a year before.
More supportively, oil prices, whose losses led yesterday's
fall in gold, have steadied, and remain over $140 a barrel.
Gold tends to rise in line with crude, as it is often bought
as a hedge against oil-led inflation. []
Traders are now looking to the currency markets for clues to
future direction in gold prices.
Pending home sales figures for May due at 1400 GMT could
give fresh insight into the state of the U.S. economy, possibly
impacting the dollar and gold. []
Signs that the U.S. market is still in the doldrums would be
supportive for gold, said Peter Fertig, a consultant for
Dresdner Kleinwort.
Traders will also be watching for any comment on currencies
from this week's G8 summit in Toyako, Japan.
Among other precious metals, silver <XAG=> was little
changed at $17.77/17.81 an ounce against $17.79/17.84 late in
New York.
Spot platinum <XPT=> rose to $1,993.00/2,013.00 an ounce
from $1,967/1,987 an ounce late in New York.
The metal slipped to $1,962.50 an ounce on Monday, its
lowest level since early June, on fears of weakening demand.
But supply fears linked to strikes and an electricity
shortage in major producer South Africa are resurfacing.
"Platinum prices will be driven more by supply-side issues,
as miners fail to meet production targets due to insufficient
power in South Africa," said John Meyer, an analyst at
investment bank Fairfax.
Spot palladium <XPD=> edged up to $446.50/474.50 an ounce
from $443.00/451.00 an ounce.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
