* Gold eases on profit taking after new 10-week high
* Firm oil, weak dollar underpin gold ahead of ECB rate call
* SPDR Gold Trust ETF holdings spike 2.2 percent on July 2
(Recasts, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, July 3 (Reuters) - Gold eased a touch on Thursday as
investors took profits after bullion touched a 10-week high, but
record oil prices and a weaker dollar underpinned the market.
Traders awaited a European Central Bank decision on interest
rates at 1145 GMT, and U.S. jobs data later in the session,
which could both have a significant impact on the dollar and
therefore on gold.
Gold <XAU=> was at $940.00/941.00 an ounce at 0940 GMT,
slightly down from $942.60/943.60 an ounce late in New York.
It hit a high of $946.50 an ounce on Wednesday, its
strongest level since April 17, on fears of rising energy costs.
While the ECB was widely expected to raise rates by a
quarter-point on Thursday, markets were awaiting its
accompanying statement for clues on future monetary policy.
Any sign of more hikes to come could support the euro
against the dollar, thus boosting gold.
"If the ECB is flagging up its worries about inflation much
more than growth, the euro's going to be stronger and the
dollar's going to be weaker, which will be bullish for gold,"
said Standard Chartered analyst Dan Smith.
Gold typically moves in the opposite direction to the U.S.
currency, as it is bought as an alternative investment. A weaker
dollar also makes dollar-priced gold cheaper for holders of
other currencies.
Dollar weakness on Thursday morning helped to hold gold near
$940. The U.S. currency slipped to a two-month low after a
report showed larger-than-expected job cuts in the United States
in June, and after the Dow sank on Wednesday. []
As well as the ECB rates decision, the market will also be
closely watching U.S. non-farm payrolls data, due out at 1230
GMT, for signs as to the future direction of the currency.
Oil prices, which struck another record high on Thursday,
are also fuelling buying of gold as an inflation hedge.
U.S. light crude oil jumped to fresh highs on Thursday
morning, peaking at $145.43, as the dollar slipped after poor
economic data and with falling stocks. []
Weakness in equities also supported gold in its own right,
as investors tend to buy gold as an alternative asset to stocks
and shares.
"When gold spiked higher a few days ago that seemed to be
much more related to falling stock markets that the falling
dollar," said Smith at Standard Chartered. "It's an important
factor to look at."
On the fundamental side, investment demand from gold remains
strong, with gold holdings of the SPRD Gold Trust jumping 2.2
percent yesterday to 658.57 tonnes.
New York-based SPDR, which is the world's largest
exchange-traded fund back by physical gold, is now at its
highest since March 18, when its holdings stood at a record.
Jewellery demand however remains soft, analysts say.
"People are worried about the fundamentals of demand at
these kind of levels," said Fairfax analyst Marc Elliott.
"Jewellers are just not going to be participating (in the
market), and it is a seasonally weak period."
Australia's largest independent gold miner, Newcrest Mining
<NCM.AX>, said meanwhile that it completed the buyback of its
hedge-book.
Newcrest said it bought back just over 4 million ounces of
gold at an average purchase price of A$868 an ounce, A$70 lower
than the average spot price over the period.
In other precious metals, spot platinum <XPT=> was at
$2,048.00/2,068.00 an ounce from $2,065.50/2,085.50 late in New
York.
Spot palladium <XPD=> was little changed at $464.50/472.50
an ounce from $463.00/471.00 an ounce.
Silver <XAG=> edged down to $18.27/18.34 from $18.32/18.39
an ounce. The metal is taking some support from ongoing strike
action in Peru, the world's biggest producer of the metal.
(Reporting by Jan Harvey; editing by Christopher Johnson)
