* Gold regroups after sell-off
* Physical demand seen as supporting bullion
(Adds comments, updates prices)
By Nick Vinocur
LONDON, July 1 (Reuters) Gold prices bounced on Wednesday,
recovering after a sell-off the previous day, as the dollar slid
against the euro and higher oil boosted the metal's appeal as an
inflation hedge.
Spot gold <XAU=> climbed as high as $939.55 before trading
at $938.50 by 1252 GMT, up from $925.85 quoted late in New York
on Tuesday when it fell to $922.60 per ounce, its lowest since
June 24.
Traders said the dollar's fall beyond $1.41 against the euro
had triggered the latest rise. []
"It's the euro moving up against the dollar," said Peter
Fertig, an analyst at Quantitative Commodities Research.
Analysts said that long-term inflation expectations were
boosting gold's appeal as investors worried that soaring public
deficits would cause prices to rise quickly once growth resumes.
"There are still plenty of people who are bullish gold
because of the headlines we see every day about government debt
buybacks and inflation looming on the horizon, said Jesper
Dannesboe, an analyst at Societe Generale.
"The market is scared of that."
Other analysts said that gold had found support from
stabilising physical demand in Asia, with buyers getting used to
higher gold prices and expecting its value to rise further.
Markets are looking ahead to U.S. economic data such as the
Institute for Supply Management's report due later on Wednesday,
which could move the dollar and gold.
BUYERS WADE IN
David Wilson, analyst at Societe Generale, said buyers of
physical gold were slowly wading back into the market, while
flows of scrap gold were showing signs of stabilisation.
"Demand from the jewellery sector seems to have stabilised,"
he said. "Physical buyers are getting used to the higher price
range and looking at any dip as an opportunity."
U.S. gold futures for August delivery <GCQ9> were at $938.8
an ounce, up more than one percent from the previous settlement
on the COMEX division of the New York Mercantile Exchange.
Holdings by the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, fell again on Tuesday by 5.19
to 1,120.55 tonnes as of June 30. The holdings are down 13.48
tonnes from a record high on June 1. []
SPDR holdings have declined in the past few weeks as
a sense of optimism about the global economy sapped investors'
appetite for bullion as a safe-haven asset. <XAUEXT-NYS-TT>.
In other precious metals, spot silver <XAG=> rose to $13.76
per troy ounce against $13.57 in New York, while platinum <XPT=>
gained to $1,181 versus $1,172.50 previously and palladium
<XPD=> climbed to $250.00 from $248.00.
Andrey Kryuchenkov, analyst at VTB Capital, said industrial
metals such as silver could rise as the macro-economic picture
improved, while platinum holders were paying close attention to
U.S. car sales data.
"Platinum and silver look more interesting in the long run,
as their industrial appeal will start to come back," he said.
(Additional reporting by Risa Maeda; Editing by Peter
Blackburn)
