* Gold dips as financial markets stabilise
* Firm dollar spark profit taking after four-month high
* ETF holdings climb to a record
(Recasts with comment, prices, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, July 14 (Reuters) - Gold slipped in Europe on Monday
as a firmer dollar sparked profit taking and as fears over U.S.
financial stability eased, reducing the precious metal's appeal
as a safe haven.
Gold <XAU=> slipped to $959.50/960.50 an ounce at 1032 GMT
from $963.00/965.00 late in New York on Friday, when it jumped
as high as $967.60.
Prices rallied on Friday as burgeoning fears over the future
of mortgage finance firms Fannie Mae and Freddie Mac prompted
sharp stock market losses and a slide in the value of the
dollar, fuelling investment into gold.
Investors cashed in profits on Monday, however, after the
United States unveiled an emergency plan to restore investor
confidence in the two lenders, leading to a recovery in equity
markets and a bounce in the dollar.
"The dollar is definitely a factor," said Dresdner Kleinwort
director of sales David Holmes. "(But) the overriding factor is
that people are reacting to the Freddie Mac, Fannie Mae story
differently."
"People who were nervous last week about banks and about
Freddie Mac and Fannie Mae are less nervous at the start of this
week," he said. "That might account for a bit of profit taking."
Bullion held by the New York-based SPDR Gold Trust, the
world's largest gold-backed exchange-traded fund, jumped to a
historic high of 705.90 tonnes on Friday amid nervousness over
Fannie Mae and Freddie Mac.
That surpassed a previous record around 663 tonnes in March.
<XAUEXT-NYS-TT>.
Although fears over the immediate health of the U.S.
financial system are receding, risk aversion is likely to
continue pushing investors towards gold, analysts said.
"In the medium term, I think safe haven buying will continue
to be a bullish factor for the gold market, which is why we see
gold above $1,000 in the fourth quarter," said Lehman Brothers
metals analyst Michael Widmer.
The dollar has also firmed on Monday after last week's
losses, clawing back almost half a percent against the euro.
[]
A firmer dollar typically pressures gold, which is often
bought as an alternative investment to the U.S. currency. A
stronger greenback also makes dollar-priced gold more expensive
for holders of other currencies.
Oil also slipped on the firm dollar, further weighing on
gold, which can be bought as a hedge against oil-led inflation.
Weaker oil prices also dampen interest in commodities buying as
a whole. []
Spot platinum <XPT=> slid to $2,005.50/2,025.50 an ounce from
$2,023.00/2,043.00 late in New York. Spot palladium <XPD=> rose
to $447.00/451.00 an ounce from $448.50/456.50 an ounce.
Silver <XAG=> was little changed at $18.75/18.81 an ounce
from $18.76/18.84 late in New York. It jumped to $18.87 an ounce
on Friday, its strongest level since March 19, tracking gains in
gold.
(Reporting by Jan Harvey; editing by Christopher Johnson)
