* Dollar slips versus the euro after U.S. returns to growth
* U.S. GDP data grows greater-than-expected 3.5 pct in Q3
* ETF Securities reports platinum, palladium buying
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, Oct 29 (Reuters) - Gold prices extended their
rebound from three-week lows in Europe on Thursday after data
showed the U.S. economy returned to growth in the third quarter
for the first time in a year, knocking the dollar.
Spot gold hit a high of $1,038.15 an ounce and was bid at
$1,037.35 an ounce at 1305 GMT, against $1,026.85 late in New
York on Wednesday. Earlier it touched a three-week low of
$1,025.75 an ounce.
The U.S. economy grew at a greater-than-expected 3.5 percent
in the third quarter, data showed on Thursday, unofficially
ending the worst recession in 70 years. []
"The U.S. GDP was better than expected, and that has
encouraged some more risk appetite to come into the complex, as
the U.S. dollar weakens," said Standard Chartered analyst Daniel
Smith.
The news knocked the dollar lower against the euro <EUR=>
and a basket of currencies <.DXY>. The euro has been viewed as a
proxy for risk appetite for much of the year, gaining when
economic data is positive. []
Weakness in the dollar benefits gold, which is often seen as
an alternative asset to the U.S. unit.
"The general trend is still for further dollar weakness,
which will be supportive for the whole commodities complex,"
said Smith.
On the wider markets, European shares turned positive after
the data, while U.S. stock futures suggested Wall Street was set
for a near 1 percent opening gain on Thursday. []
Oil prices rose back towards $79 a barrel after the GDP
figures, making up some lost ground after the previous session's
2.6 percent decline. []
Strength in crude prices often helps gold, as it supports
interest in commodities as an asset class, and because bullion
is sometimes viewed as a hedge against oil-led inflation.
PRICES TEMPT
Some physical gold demand is also returning to the market
after prices slid, dealers said, helping the metal shrug off a
further small outflow from the world's largest gold-backed
exchange-traded fund.
Gold traders in major bullion consumer India are continuing
to stock up for the wedding season, tempted by the recent price
decline. []
"Traders have responded well to the recent correction after
Diwali, and a lot of orders are getting filled," said Pinakin
Vyas, chief-manager treasury of Mumbai's IndusInd Bank.
On the investment side, New York's SPDR Gold Trust <GLD>
reported an outflow of a further 1.22 tonnes on Wednesday, the
third such sale this week. []
Standard Bank analyst Walter de Wet said the fact that gold
is managing to hold at such elevated levels despite fairly weak
investment demand suggested a return to dollar weakness could
result in a fresh move higher.
In supply news, Gold Fields <GFIJ.J>, the world's
fourth-largest gold producer, said proposed power tariff hikes
would have a big impact on its business, but could not say if it
would have to shut any shafts. []
Among other precious metals, spot silver <XAG=> was bid at
$16.43 an ounce against $16.09, tracking gold higher after the
previous session's 3.3 percent decline.
Platinum <XPT=> was at $1,324.50 an ounce against $1,303.50,
while palladium <XPD=> was at $319.50 against $313.50.
ETF Securities said it saw a 6,401 ounce or 1.7 percent
inflow into its ETFS Physical Platinum <PHPT.L> exchange-traded
commodity on Wednesday, while holdings of its ETFS Physical
Palladium <PHPD.L> ETC rose nearly 1 percent to record levels.
(Editing by Sue Thomas)
