* Dollar pares gains; stock futures point to mixed U.S. open
* SPDR gold ETF holdings decline 0.1 pct; Indian demand down
* ETF Securities London palladium ETC holdings hit record
(Releads, updates prices)
By Jan Harvey
LONDON, Oct 22 (Reuters) - Gold prices steadied in Europe on
Thursday as the dollar gave up some of its earlier gains against
the euro, supporting interest in the precious metal as an
alternative to the U.S. currency.
A decline in the equity markets in early trade dented
appetite for risk, benefiting the dollar at the expense of
higher-yielding currencies. But the single currency has made up
lost ground as Wall Street stocks headed for a mixed opening.
Spot gold <XAU=> was bid at $1,057.50 an ounce at 1228 GMT,
against $1,058.35 late in New York on Wednesday, having touched
a low of $1,052.70. U.S. gold futures for December delivery
<GCZ9> on the COMEX division of the New York Mercantile Exchange
fell $6.10 to $1,058.40.
Societe Generale analyst David Wilson said given gold's weak
underlying fundamentals, its rally to record highs of $1,070.40
last week and its continued strength are difficult to justify.
"When you look at the inflation outlook, the U.S. bond
market is not factoring in any inflation for a while," he said.
"The key driver is going to remain exchange rates. They have
been the driver of the smaller moves, though in terms of the
bigger moves, there have been some more technical issues there."
The dollar rolled back some of its initial gains in early
afternoon trade to hold near multi-month lows against the euro
<EUR=>. []
U.S. stock index futures headed for a mixed opening ahead of
leading indicator and jobs data and a raft of major corporate
earnings reports. Meanwhile European shares were down 1 percent,
also off earlier lows. [] [] []
SLACK DEMAND
Demand for physical gold remained slow, with jewellery
buying tailing off in major consumer India after last week's
festival period and as a decline in the rupee made dollar-priced
assets more expensive. []
"Post-Diwali, demand has turned slack," said a dealer with a
bullion-dealing bank.
The world's largest gold exchange-traded fund, the SPDR Gold
Trust <GLD>, also reported an outflow on Wednesday. Its holdings
fell nearly 40,000 ounces or 0.1 percent.
"Speculator interest is slowly easing, while physical demand
concerns are as ever present at record high prices," said VTB
Capital analyst Andrey Kryuchenkov in a note.
Among other precious metals, silver <XAG=> was bid at $17.52
an ounce against $17.66 late on Wednesday, tracking losses in
gold. Platinum <XPT=> was at $1,360.50 an ounce against $1,359.
The world's biggest platinum producer, Anglo Platinum
<AMSJ.J>, said its third-quarter production of refined platinum
fell 9.9 percent from last year. []
Lonmin <LMI.L>, the world's third-largest platinum miner,
said its metal output fell 6 percent in the year to September,
but chief executive Ian Farmer was positive on prices.
[]
"Jewellery demand and investment demand have been very
helpful to us and very solid, and hopefully that will continue,
he told Reuters in an interview.
"But I think the growth area will be industrial demand as it
starts to come back over the course of the next 18 months."
Palladium <XPD=> bucked the trend to rise 0.75 percent. It
was bid at $335 against $332.50, lifted by fears over the
outlook for Russian and South African supply and hopes for a
recovery in automotive demand.
Platinum and palladium are primarily bought by the car
industry for use in catalytic converters.
Investment demand for the metal also remains strong. ETF
Securities said holdings of its London palladium exchange-traded
commodity rose nearly 9,000 ounces on Wednesday to record highs
just below 550,000 ounces. []
(Additional reporting by Julie Crust; Editing by Anthony
Barker)
