* Gold edges higher on safe-haven buying
* Dollar weakens on sovereign wealth fund report
* Investors remain nervous despite banking stocks recovery
(Recasts, adds comment, changes dateline, pvs Singapore)
By David Sheppard
LONDON, July 17 (Reuters) - Gold edged up on Thursday as
investors bought bullion due to concerns about the stability of
the U.S. financial system and the soft dollar.
Spot gold <XAU=> was at $964.00/965.00 an ounce at 0951 GMT
from $963.10/964.10 in late New York trades on Wednesday, when
it fell more than 1 percent after oil prices tumbled. It hit a
four-month high of $987.75 an ounce on Tuesday.
Bank stocks in the United States and Europe have recovered
over the past couple of days, but analysts say many investors
remain concerned about financial risks.
"The longer-term trend for gold is still intact," said
Merril Lynch analyst Daniel Hynes.
"Prices fell yesterday due to oil and better equity
performance, but there is still a lot of insecurity over the
U.S. banking sector which has driven investors back into gold."
Gold is used as an alternative to stocks during times of
financial uncertainty.
Dollar weakness also boosted gold, as investors look to
hedge against the declining fortunes of the U.S. currency
The dollar fell to stand within a cent of this week's record
low versus the euro on Thursday after a report sovereign wealth
funds have been cutting back on dollar exposure. []
"Gold in recent weeks has got significant support from the
higher oil price, U.S. dollar fragility and the uncertain
outlook for returns from other assets." " said David Moore,
analyst at Commonwealth Bank of Australia in Sydney.
Platinum bounced higher after earlier slipping to a
two-month low of $1,913.50 an ounce.
The metal used to make autocatalysts has been under pressure
recently due to concerns economic slowdown will dent demand.
"Speculation lower auto sales will reduce metal demand led
platinum to fall," said BullionDesk.com in a note.
"We could see platinum test lower in the coming sessions,
but I would imagine the majority of traders will be reluctant to
significantly short the market, given its vulnerability to
further supply disruptions."
Spot-platinum <XPT=> was trading at $1,937.50/1,957.50 an
ounce from $1,919.00/1,939.00, while sister metal palladium
<XPD=> rose to $430.50/438.50 from $425.00/$433.00.
Silver <XAG=> edged up to 18.85/18.90 from $18.71/18.80.
(Reporting by David Sheppard; editing by Peter Blackburn)
