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* Gold rallies from $912.90 as dollar turns south
* SPDR gold ETF holdings <XAUEXT-NYS-TT> ease slightly
* Gold rally tired, but risk aversion could arrest fall
By Veronica Brown and Nick Vinocur
LONDON, June 23 (Reuters) - Gold rallied from a six week low
hit earlier in the global session, with currency fundamentals
proving the dominant factor as the dollar got stung by concerns
over U.S. indebtedness.
Spot gold stood at $919.05 per ounce by 1005 GMT, having
earlier hit a six week low at $912.90 in Asian trade. That
compared with $921.90 quoted late in New York on Monday.
Traders said that bullion prices, having hit three month
highs recently just shy of $1,000 an ounce, were ripe for the
falls seen over the past few days with speculators looking to
clear out stale long positions.
But the metal's traditional role as a hedge against jittery
sentiment in other asset classes could also kick in as
investors, spooked by doubts about growth prospects for leading
economies, shift into risk-averse gear.
"All eyes are on whether the dollar is going to be subject
to a fresh-selling wave. The only source I see for that would be
if the Fed gets more vocal in communicating on the next batch of
Treasury buying," said Ashraf Laidi, analyst at CMC markets in
London.
"Anything short of that, will remain neutral or positive for
gold," he added.
Concerns about reserve diversification away from U.S. assets
caused the dollar to turn lower against the euro ahead of the
Federal Reserve's monthly meeting, after Moody's said one risk
to the U.S.' triple-A rating is if the dollar is challenged as
the main reserve currency. [].
A weaker dollar makes metals and other commodities priced in
the U.S. unit cheaper for non-U.S. investors.
Potential inflationary concerns from oil receded, with crude
prices falling below $67 <CLc1> per barrel -- influenced by
renewed worries about the economic outlook for major economies.
INVESTOR CAUTION
U.S. gold futures for August delivery <GCQ9> steadied to
$920.40 per ounce. August futures <GCQ9> settled down 1.6
percent at $921 an ounce on Monday on the COMEX division of the
New York Mercantile Exchange.
Investor caution was stirred by the World Bank on Monday,
which said prospects for the global economy remained "unusually
uncertain" as it cut 2009 growth forecasts for most economies.
"Investor risk appetite has lost forward momentum as the
market begins to question the extent to which the green shoots
of the financial risk rally have roots in the real economy,"
Tullet Prebon said in a note to clients.
"There is nothing like a 3.1 percent drop in the S&P on a
day to get the bears out of the woods..., but the joke aside it
is beginning to look like those who hoped for a V-shaped
recovery will find that we are looking at the tail end of it."
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings fell to 1,131.24 tonnes
as of June 22, down 0.91 tonnes from the previous business day.
[]
It was the first change in the holdings since June 5. The
holdings hit a record 1,134.03 tonnes earlier in the month.
In other metals, silver held firm at $13.75 <XAG=>, up
slightly from $13.72 quoted late in New York on Monday. Platinum
rose to $1,164.50 <XPT=> from $1,159.50, while palladium <XPD=>
strengthened to $234.00 from $232.00.
(Additional reporting by Chikako Mogi in Tokyo)
(Editing by Keiron Henderson)
