*Gold steadies after dip as dollar weakens, oil firms
*Platinum, palladium outlook seen weaker
(Adds comment, updates prices)
By Jan Harvey
LONDON, July 28 (Reuters) - Gold was steady in Europe on
Monday as firmer oil and a weaker dollar underpinned prices,
with trading light ahead of key economic data due later this
week.
The precious metal is expected to remain rangebound as the
market takes a breather after Friday's volatile session, with
traders eyeing an initial target of $935 an ounce.
Gold <XAU=> was trading at $927.40/929.40 at 1312 GMT,
unchanged from its level late in New York on Friday, when it
moved in a volatile $16 range.
UBS analyst John Reade said light summer liquidity
conditions were partly to blame for Monday's directionless
trade.
"We have non-farm payrolls this week, which is always the
biggest event in the forex market," he added. "People tend not
to trade too much ahead of that."
Oil prices meanwhile are underpinning gold. Crude bounced
back after its $20-a-barrel slide of the last two weeks,
boosting interest in gold as an inflation hedge, and in
commodities as an asset class.
Crude futures rose above $124 a barrel on Monday as fresh
attacks on oil installations in major producer Nigeria fuelled
fears over the outlook for supply. []
The dollar also weakened a touch against the euro, adding to
the appeal of gold as an alternative investment, as investors
concluded the U.S. economic climate remains poor. []
Investor interest in the metal has steadied.
Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, were unchanged on Monday at
673.4 tonnes. The amount of gold held to back ETF Securities'
Physical Gold ETC <PHAU.L> rose 1 percent week-on-week.
PLATINUM STEADY
Among other precious metals, platinum steadied after a
second week of decline.
The metal has been pressured by fears over weakening demand
as the U.S. and global economic outlook darkened and amid
speculation over the financial health of carmakers in the U.S.
and Japan.
Platinum is widely used by the car industry in autocatalysts
and any sign of a slowdown in the automotive sector could hit
demand for the metal hard.
Supply fears linked to a power shortage in South Africa also
eased after the country's state power utility Eskom said it sees
no further powercuts this year.
The world's top platinum producer AngloPlatinum <AMSJ.J>
said on Monday it will meet its annual production target of 2.40
million ounces -- against 2.47 million last year -- and expects
output to increase significantly in the second half.
Investment bank JP Morgan on Monday cut its 2008 price
target for platinum to $1,885 an ounce from $2,156, and for 2009
to $1,650 from $1,981, citing worsening economic conditions.
[]
Michael Jansen, an analyst at the bank, said in a note that
it appears South Africa's major mining companies are "now coping
quite successfully with the power situation".
Spot platinum <XPT=> was little changed at
$1,746.00/1,766.00 against $1,745.00/1,765.00 late in New York.
Spot palladium <XPD=> rose to $388.50/396.50 an ounce from
$380.50/388.50 late in New York.
Jansen added however that "palladium demand is weaker than
platinum demand due to the downsizing taking place in term of
new vehicle purchases in the U.S. right now".
"Hence, while we are short term bearish platinum - looking
for a move down towards $1,500 over the next 9 months - the
outlook for palladium is not a great deal better," he added.
Silver <XAG=> was steady at $17.34/17.41 an ounce from
$17.35/17.43 late in New York.
(Reporting by Jan Harvey; Editing by Michael Roddy)
