* Wilting dollar helps commodities recover after losses
* Chinese car sales jump; palladium rises more than 2 pct
(Updates prices)
By Jan Harvey
LONDON, July 9 (Reuters) - Gold recovered in Europe on
Thursday from the last session's eight-week low, as the weak
dollar prompted buying of the metal as a currency hedge.
Spot gold <XAU=> was bid at $913.40 an ounce at 1105 GMT,
against $908.45 an ounce late in New York on Wednesday. U.S.
gold futures for August delivery <GCQ9> on the COMEX division of
the New York Mercantile Exchange rose $4.40 to $913.70 an ounce.
"This morning some support was derived from a weaker U.S.
dollar," said Alexander Zumpfe, a trader at precious metals
house Heraeus. "Retail investor buying is a bit stronger again
compared to previous weeks."
"Industrial demand, however, remains weak," he added.
The soft dollar also helped other commodities tick higher,
while a recovery in stock markets after a five-day losing streak
and a less cautious tone to currency markets suggested recent
sessions' heavy risk aversion may be abating. [] []
Gold, platinum, oil and copper sold off on Wednesday after
news the U.S. Commodity Futures Trading Commission was
considering a clampdown on excessive speculation.
The Reuters-Jeffries CRB index <.CRB>, which tracks prices
across 19 commodity markets, slipped more than 2 percent to
settle at its lowest level since May 1.
Prices bounced back on Thursday, however, with oil rising
around $1 a barrel. Rising crude prices often support gold,
which can be bought as a hedge against oil-led inflation. []
In the gold market, demand for investment products such as
exchange-traded funds -- a major support of prices earlier in
the year amid volatility in other markets -- remained sluggish.
Holdings of the world's largest gold ETF, the SPDR Gold
Trust <GLD>, declined more than 10 tonnes on Wednesday, while
those of ETF Securities' ETFS Physical Gold product slipped
12,500 ounces 0.4 percent. []
OUTPUT FALLS
In supply news, South Africa, the world's third largest gold
miner after China and the United States, said its output of the
metal fell 10.5 percent in May from a year ago. []
Among other precious metals, platinum <XPT=> was at
$1,105.50 an ounce against $1,096, while palladium <XPD=> was at
$237 against $231.50. Both metals are primarily used in car
manufacturing as a component in catalytic converters.
Traders of palladium in particular were cheering by news
from China that its passenger car sales rose 47.7 percent in
June from a year earlier. []
Chinese cars are usually petrol-fuelled, meaning they use a
higher proportion of palladium than platinum, which is a primary
component in diesel catalysts.
Dealers say as palladium is still relatively expensive at
present, it is unlikely to immediately post significant new
gains, although platinum has met some interest.
"Even though there is very little obvious buying taking
place right now, platinum is stil managing to hold its head
above $1,100," noted one analyst, saying that strong turnover in
Shanghai suggests good Chinese buying at these levels.
Elsewhere silver <XAG=> was at $12.86 an ounce against
$12.84.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
