* Gold turns higher as dollar slips vs basket of currencies
* ETFS Physical Platinum up another near 1 percent
* Bullion/equities link weakens as currencies return to fore
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By Kylie MacLellan and Jan Harvey
LONDON, June 16 (Reuters) - Gold rose in Europe on Tuesday
as the dollar broadly weakened and an upturn in oil prices
boosted bullion's appeal as a hedge against potential
oil-induced inflation.
The dollar slipped against a basket of currencies after
Russia said the world needed new reserve currencies, while the
euro extended gains after a strong reading of German economic
sentiment. []
Oil rose above $72 a barrel as the dollar slid and U.S.
housing data showed a jump in new construction starts and
permits. Gold prices often track those of crude, as the metal
can be bought as a hedge against inflationary pressures sparked
by higher oil prices. []
Spot gold <XAU=> was bid at $935.10 an ounce at 1429 GMT,
against $927.85 an ounce late in New York on Monday.
"The dollar has been the key thing," said Standard Chartered
analyst Dan Smith. "The correlation with the dollar has stepped
up quite a bit in the last few weeks."
"We have seen some quite good interest from investors as
well," he added. "There has been quite a good uptick in terms of
net speculative positions...I think that is generally supportive
for gold and it suggests the downside is quite limited."
Gold has slipped sharply from the three-month high of
$989.80 it hit earlier this month, as a dollar rally dampened
investors' interest in gold and made dollar-priced commodities
more expensive for holders of other currencies.
MARKET RISKS
Stock markets gained in Europe, while Wall Street opened
higher as renewed dollar weakness lifted shares in natural
resource companies, and a rebound in May housing starts lifted
investor sentiment. []
VTB Capital analyst Andrey Kryuchenkov said gold's drop
alongside falling global equities markets on Monday could mean
the precious metal's attractiveness as a hedge against market
risks had diminished dramatically.
"It is now clear that the buying momentum in gold could only
have a significant recovery on the back of rising inflation
expectations and a tumbling dollar," he said in a note.
Among other precious metals, silver <XAG=> rose to $14.17 an
ounce against $14.05.
Platinum <XPT=> was at $1,224.00 an ounce against $1,204,
while palladium <XPD=> was at $243.00 against $240.50. Both are,
like gold, tracking the dollar and overall interest in
commodities.
Interest in platinum exchange-traded funds -- which issue
securities backed by metal -- remains firm, with the ETFS
Physical Platinum fund <PHPT.L> up another 3,000 ounces or
nearly 1 percent on Monday.
"(Platinum) should find further support ahead of $1200 from
bargain hunters, as reflected by the increase in ETF holdings,"
said James Moore, an analyst at TheBullionDesk.com.
The metals remain pressured, however, by fears over the
outlook for carmakers, their main buyers. New car registrations
in Europe fell for a 13th month in May as companies struggled to
make sales without government incentives. []
(Editing by Veronica Brown)
