* Premiums for gold bars in Tokyo rise
* Gold supported by inflation worries
* U.S. industrial output slips
(Updates after U.S. industrial production data)
By Pratima Desai
LONDON, March 17 (Reuters) - Gold rose on Thursday,
sustained by an increase in exchange traded product (ETP)
holdings, stronger physical demand and a weaker dollar, but
investor selling to cover losses in other markets limited gains.
Platinum and palladium fell as the market fretted about a
loss of demand due to car plant closures in Japan after the
earthquake. Platinum and palladium tumbled to 3-1/2 month lows
of $1,654 and $684.50 an ounce respectively, before recovering.
Spot gold <XAU=> was bid at $1,401.45 a troy ounce at 1516
GMT from $1,398.70 late in New York on Wednesday. Earlier this
week gold fell to a one-month low of $1,380.90.
U.S. gold futures for April <GCJ1> were up $5.9 an ounce to
$1,402 an ounce.
Gold was little moved by U.S. data that showed higher
inflation, falling jobless claims and a dip in industrial
production (IP). []
"Gold is pretty much moving along with the dollar," RBS
analyst Daniel Major said.
"And I think certainly when we've got a number of much
larger concerns than a small miss on IP...that's the reason why
asset prices aren't reacting to the data itself."
Stock markets around the world showed signs of recovery, but
many investors were nursing large losses because of the sell-off
triggered by the earthquake and tsunami that hit Japan last
week. [] [] [] []
These losses in some cases have to be covered by selling
assets such as gold which have performed well in recent months.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings edged up to 1,217.295 tonnes
by March 16 from 1,212.745 tonnes by March 15, their lowest
since May of last year. []
"With gold dropping below $1,400 we continue to see good
demand in the physical market. At levels above $1,430 we see
scrap coming to the market," said Walter de Wet, analyst at
Standard Bank. "There's been consistent liquidation ... since
last week, following the earthquake."
Premiums for gold bars rose to as much as $2 an ounce in
Tokyo, double from earlier this week, as a record-high yen
boosted demand and supply tightened. []
SHORTAGES OF PARTS AND WORKERS
The dollar <.DXY> fell broadly against major currencies and
was near a record low against the yen <JPY=>, which was boosted
by expectations of currency repatriation to help Japan's
reconstruction effort. []
It pared some losses against the euro after data showed U.S.
consumer prices rose at their fastest pace in more than 1-1/2
years in February. []
A lower dollar makes commodities priced in dollars cheaper
for holders of other currencies, while gold is also used as a
hedge against inflation pressures often sparked by rising crude
oil prices. []
"Concerns remain that rising commodity prices could feed
into higher inflation, particularly in Europe (where) headline
inflation is already a concern," ANZ said in a note. "Gold is
expected to benefit in a higher inflation environment."
Spot silver <XAG=> was at $34.18 an ounce from $34.20 late
on Wednesday.
Platinum <XPT=> was at $1,700.49 an ounce from $1,686.50 and
palladium <XPD=> at $714.72 from $694.50.
Part of the reason for the recovery in the platinum group
metals (PGM) was news on Wednesday that car maker Nissan Motor
<7201.T> said it would restart operations at a plant in Japan.
[]
Japan's nuclear crisis has hit demand for PGM, with some of
the world's top auto makers forced to halt production of
vehicles that use the metals for autocatalysts. []
Many other plants are still shut and may remain so for some
time. Japanese auto makers, led by Toyota Motor Co <7203.T>, are
struggling to restart production amid a shortage of parts and
workers. []
"The PGMs have been significantly affected by the economic
dislocation in Japan and disruption to Japanese auto output,"
HSBC said in a note.
"Despite the disruption in Japanese production and the drop
in PGM demand by the auto makers in that nation, the underlying
supply/demand fundamentals for platinum and palladium remain
tight. Prices are likely to trade higher in the near term."
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Price graphic http://link.reuters.com/pys58r
Japan earthquake and commodities:
http://link.reuters.com/kuw58r
Japan disaster in figures http://r.reuters.com/ser58r
Graphics by topic http://r.reuters.com/fyh58r
Picture, graphic packages http://r.reuters.com/wyb58r
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(Additional reporting by Sue Thomas; Editing by Anthony Barker)
