* Wilting dollar helps commodities recover after losses
* Chinese car sales jump 47.7 pct in June
(Updates prices, adds comment)
By Jan Harvey
LONDON, July 9 (Reuters) - Gold firmed on Thursday as
weakness in the dollar prompted interest in the precious metal
as a currency hedge, with some physical demand after the
previous session's fall also supported prices.
Spot gold <XAU=> was bid at $912.50 an ounce at 1417 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 $3.50 to $912.80 an ounce.
Gold sold off on Wednesday in line with other commodities,
slipping to an eight-week low, after the U.S. Commodity Futures
Trading Commission said it was considering a clampdown on
excessive speculation in commodities.
Afshin Nabavi, head of trading at MKS Finance in Geneva,
said the slip was met with some light physical buying in the Far
East and Europe.
"We saw some small demand out of the Far East this morning,"
he said. "But India and the Middle East is still very quiet."
"Also, the U.S. dollar is a bit weaker today," he added.
The dollar gave back some of the previous session's gains on
Thursday as equities firmed in Europe and U.S. stock futures
rose, denting interest in the currency as a haven from risk.
[]
A recovery in stock markets after a five-day losing streak,
gains in industrial commodities such as oil and base metals and
a less cautious tone to currency markets suggested recent
sessions' heavy risk aversion may be abating. []
Oil's tick higher also helped support gold, which can be
bought as a hedge against oil-led inflation. []
Demand for gold investment products such as exchange-traded
funds -- a major support of prices earlier in the year amid
volatility in other markets -- remained sluggish, however.
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
$1,104.50 an ounce against $1,096, while palladium <XPD=> was at
$235 against $231.50. Both metals are primarily used in car
manufacturing as a component in catalytic converters.
Traders of palladium in particular were cheering 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, 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 still managing to hold its head
above $1,100," said one analyst, adding strong turnover in
Shanghai suggests good Chinese buying at these levels.
Elsewhere silver <XAG=> was at $12.85 an ounce against
$12.84.
(Editing by James Jukwey)
