* Gold awaits direction from euro-dollar; eyes chart support
* Oil slips below $79 a barrel, equities slide in Europe
* London palladium ETC holdings hit record
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, Oct 28 (Reuters) - Gold prices held near $1,035 an
ounce in Europe on Wednesday, little changed from the previous
session, as the dollar steadied against the euro after hitting a
two-week high earlier this week.
Further gains in the precious metal are being tempered by
weakness in physical demand, with the world's largest
gold-backed exchange-traded fund reporting a second daily
outflow on Tuesday, dealers said.
Spot gold was bid at $1,035.30 an ounce at 1029 GMT, against
$1,038.80 late in New York on Tuesday. U.S. gold futures for
December delivery <GCZ9> on the COMEX division of the New York
Mercantile Exchange inched up 60 cents to $1,036.00 an ounce.
Analysts say this week's price correction is not surprising,
given the strength of its upward move since early September.
"Gold is behaving in textbook fashion," Calyon metals
analyst Robin Bhar told Reuters. "In any bull market you have to
confirm support, and in this market, support is in the $1,030
area, which was the previous high."
He said while interest in physical gold jewellery and ETFs
was waning, possibly supporting the case for a further pullback,
both this and the dollar rebound looked to be temporary.
"All the longstanding bull factors for gold -- inflation,
dollar weakness, unhappiness with the monetary system as it
stands and what governments are doing to their paper currencies
-- are still there," he said. "The uptrend remains intact."
Gold is awaiting direction from the dollar's exchange rate
with the euro <EUR=>, which is steady from a day ago. []
The euro fell to a two-week low of $1.4769 on Tuesday as
investors trimmed long positions after disappointing U.S.
consumer confidence figures. []
Gold tends to move in a close inverse relationship with the
U.S. unit, becoming cheaper for holders of other currencies and
a more appealing alternative asset as the dollar weakens.
CHART SUPPORT EYED
From a technical perspective, support for a move higher in
gold is reliant on it holding firm above its previous
longstanding record high near $1,030 an ounce, analysts who
study past price charts to determine future moves said.
"As long as it stays above the $1,028/23 support area,
(gold) will remain near-term bullish and once again target...
$1,066.30 and the mid-October high at $1,071.29," Commerzbank
said in a note.
"Failure at $1,023 would indicate that a slip towards the
55-day moving average at $1,001.71 and the major psychological
$1,000 mark is probable."
Physical gold demand remains relatively lacklustre, with the
largest gold ETF, New York's SPDR Gold Trust <GLD>, reporting a
second consecutive daily outflow on Tuesday. []
Gold buyers in India, the world's biggest bullion consumer
last year, trickled in as falling prices sparked some bargain
hunting, but a weak rupee dented buying interest. []
Among other precious metals, spot silver <XAG=> was bid at
$16.55 an ounce against $16.65, tracking moves in gold.
Elsewhere platinum <XPT=> was at $1,312.50 an ounce against
$1,312, while palladium <XPD=> was at $323 against $325.50.
The metals are being supported by supply concerns from major
producer South Africa and hopes demand from carmakers, the main
buyers of platinum and palladium, will improve.
ETF Securities reported on Wednesday that holdings of its
palladium-backed exchange-traded commodity rose 2.2 percent to a
record on Oct. 27. Its gold and platinum funds also saw inflows.
[]
(Editing by James Jukwey)
