* Obama's softer tone on banks lifts risk appetite
* Dollar retreats from 6-month high versus euro
* Lonmin, Aquarius report lower output
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Jan 28 (Reuters) - Gold firmed in Europe on Thursday
as the dollar eased broadly after U.S. President Barack Obama
softened his tone on bank restrictions in his State of the Union
speech, lifting appetite for risk.
Platinum group metals outperformed other precious metals,
with platinum rising nearly 1 percent and palladium 1.5 percent.
Platinum producers Lonmin <LMI.L> and Aquarius <AQP.AX>
announced lower quarterly output on Thursday.
Spot gold <XAU=> was bid at $1,090.80 an ounce at 1040 GMT,
against $1,087.25 late in New York on Wednesday. U.S. gold
futures for February delivery <GCG0> on the COMEX division of
the New York Mercantile Exchange firmed $6.10 to $1,090.60.
Gold prices have declined some 4 percent in the last two
weeks as the dollar rallied against the euro <EUR=>, with fears
over Greece's fiscal situation and waning risk appetite lifting
the U.S. unit at the expense of higher-yielding currencies.
"The precious metals have been struggling with dollar
strength so far," said Saxo Bank senior manager Ole Hansen.
He said the Obama speech and expectations Federal Reserve
chairman Ben Bernanke will be reappointed had helped dispell
some risk aversion. "These things have removed some uncertainty,
and that has helped the market to stabilise," he said.
The dollar slipped from a six-month high versus the euro
after Obama laid out plans to revive the U.S. economy and
allayed market worries about moves to limit bank risk-taking in
his comments. []
Strength in the U.S. dollar curbs gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
In his first State of the Union address to Congress, Obama
pushed job creation to the top of his agenda and vowed not to
abandon his struggling healthcare overhaul. He also moderated
his tone on bank restrictions. []
Analysts said some investors bought back euros and other
higher-yielding currencies sold last week when Obama's pledge to
crack down on U.S. banks' risk-taking triggered risk aversion.
APPETITE RECOVERS
Among other commodities, oil rose towards $74 a barrel
<CLc1> after Obama's speech and the Fed's decision to maintain
low interest rates revived some confidence over economic growth.
[]
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
In production news, the China Gold Association said Chinese
gold output jumped 11.34 percent to a record 313.98 tonnes in
2009, securing the country's position as the world's largest
producer of the yellow metal. []
Silver <XAG=> rose to $16.62 an ounce versus $16.54,
tracking gold's gains. Holdings of the world's largest silver
exchange-traded fund, the iShares Silver Trust <SLV>, rose 0.5
percent to 9,384.98 tonnes on Jan. 27, it said. []
Platinum <XPT=> was at $1,516 an ounce against $1,502.50,
while palladium <XPD=> was at $417 against $411.50.
Lonmin Plc, the world's number three platinum producer, said
platinum sales fell 13.6 percent in its first quarter as refined
output of the metal declined. []
Fifth-largest miner Aquarius Platinum also said its
attributable output fell 14.8 pct year-on-year. []
Traders said while the figures were likely to underpin fears
that production will be weak this year, their impact on prices
would be limited. "Mining problems are already in the price, as
everybody is expecting them," said one PGMs trader.
A Reuters poll published on Wednesday showed platinum and
palladium are expected to outperform other precious metals this
year, with a new wave of investor demand boosting prices in
anticipation of increased industrial use. []
(Reporting by Jan Harvey; Editing by Amanda Cooper)
