* Euro gains ground vs the dollar, eyes $1.40
* Oil prices move higher as U.S. currency weakens
(Updates throughout, changes dateline-pvs TOKYO)
By Jan Harvey
LONDON, June 9 (Reuters) - Gold edged higher in Europe on
Tuesday as the euro clawed back some lost ground against the
dollar, boosting the precious metal's appeal as an alternative
asset to the U.S. currency.
Spot gold <XAU=> was bid at $952.50 an ounce at 0916 GMT,
against $950.05 an ounce late in New York on Monday.
The dollar slipped on Tuesday, giving back some of its
gains against the euro, as investors reassessed whether
speculation of a possible rise in U.S. interest rates later this
year may push the U.S. currency higher. []
A jump in sterling, which rallied after stronger than
expected UK housing figures, helped lift the euro from earlier
losses against the dollar.
"The state of sterling at the moment against the U.S. dollar
is helping the euro to recover, hopefully at some stage back to
$1.40," said Gerry Schubert, head of precious metals at INTL
Commodities.
A clearing out of weak long positions -- speculative
positions on New York's COMEX exchange -- from the gold market
has given it a stronger base for gains, he added.
"The most important point is that we have seen some long
liquidation that we needed to see," he said. "The whole picture
looks a lot healthier than it looked five, six days ago."
The metal is likely to spend some time consolidating above
$950 an ounce after sliding 3 percent in the last two sessions,
but underlying interest in gold as a hedge against currency
weakness and prospective inflation remains firm, analysts said.
The weaker dollar also helped prices of other commodities,
such as oil, to rise. Firmer crude prices often help gold, which
can be bought as a hedge against oil-led inflation. []
BUOYANT
Buoyant commodity prices helped lift European shares in
early trade, after stock markets declined in Asia as investors
worried a three-day equity rally was overdone.
Gold moved the opposite way to equities early this year as
they acted as a barometer for risk appetite, but the link has
weakened. []
Physical demand remained relatively quiet, with the market
dominated by investment buying. In India, the world's largest
bullion market, high prices kept traders on the sidelines as the
wedding season approached its end.
Among other precious metals, platinum eased a touch from
late Monday but lifted from early lows as the dollar wilted.
Mitsubishi precious metals strategist Tom Kendall said with
no underlying fundamental reason for autocatalyst material
platinum to make fresh gains, it is likely to reflect dollar
moves.
"I would expect prices to stall around here and then drift
lower," he said. "But if the dollar is going to sell off again
then in dollar terms, prices will naturally move higher."
Platinum <XPT=> was quoted at $1,241 an ounce against $1,242
late in New York on day, while palladium <XPD=> was at $251
against $247.50. Silver <XAG=> was at $15.00 an ounce against
$14.91, tracking moves in gold.
(Reporting by Jan Harvey; Editing by William Hardy)
