* Gold benefits from weaker dollar ahead of Fed
* Markets await Bernanke comments for clues on U.S. growth
* Worker killed at AngloGold Ashanti mine in SAfrica
(Updates throughout, previous TOKYO)
By Jan Harvey
LONDON, Aug 11 (Reuters) - Gold firmed in Europe on Tuesday
as the dollar's weakness boosted interest in the precious metal,
while firmer oil prices also highlighted bullion's appeal as a
potential hedge against inflation.
Spot gold <XAU=> was bid at $945.60 an ounce at 1024 GMT,
against $944.65 an ounce late in New York on Monday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange rose $1.10 to $948.00 an ounce.
Gold is chiefly being driven by the currency markets at
present, analysts said, as a weaker dollar makes commodities
priced in the currency cheaper for non-U.S. investors.
"The main issue is still the commodity versus dollar
relationship, which we saw had a change in sentiment on Friday
when the (U.S. July payrolls) number caused the dollar to
strengthen," said Ole Hansen, senior manager at Saxo Bank. "This
is still the main driver in the market."
"We broke below $950 yesterday, which triggered quite a few
stops in the market," Hansen added. "Today we are testing the
sell-off, and I think we will have a resistance around $953 and
support down towards the low $940."
Traders are looking ahead to a Federal Reserve meeting in
Washington for its impact on currencies, and by extension gold.
While the Fed is likely to hold interest rates, Chairman Ben
Bernanke's accompanying statement will be watched for clues on
the direction of the U.S. economy.
Better-than-expected economic data, a recovery in equity
markets and the success of the government's Cash for Clunkers
programme to revitalise car sales are all boosting hopes the
recession may be bottoming out in the United States.
If Bernanke confirms this view, it could boost expectations
interest rates will rise, which may benefit the dollar. The U.S.
unit has previously benefited from economic weakness as it is
seen as a haven, but this trend may be turning, analysts say.
"The dollar's ability to rally amid this improving economic
environment is a major change and shows that the focus of dollar
strength is shifting from risk-aversion to future interest rate
hikes," said MF Global in a note.
BELLWETHER
On the wider markets, European shares ticked higher as
firmer metals prices lifted mining stocks, while world stocks
shrugged off disappointing Chinese data. []
Oil also rose as record Chinese imports and refinery output
offset mixed economic data. Strength in the commodities
bellwether can indicate rising interest in the asset class, and
fuels interest in gold as a hedge against inflation. []
But lacklustre demand for physical gold remains a drag on
prices. Some jewellery buying re-emerged in major gold consumer
India after prices hit a one-week low on Monday, but many orders
were made around $930-935 an ounce. []
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD>, said its holdings declined by
another 11,329 ounces on Monday, and have fallen more than 65
tonnes from record levels since June 1. []
While ETF inflows have slowed in the second and third
quarters after a strong start to the year, investment in futures
on New York's COMEX exchange have risen to balance this out. But
the sustainability of this trend is uncertain, analysts said.
"With fund players having built substantial longs over the
last few weeks and the market lacking strong physical interest
to absorb pockets of selling, gold is likely to remain at risk
to further bouts of liquidation in the near-term," said James
Moore, an analyst at TheBullionDesk.com.
In supply news, the South African mineworkers' union said a
worker had been killed at AngloGold Ashanti's <ANGJ.J> Mponeng
mine. []
Among other precious metals, silver prices climbed along
with gold. Silver <XAG=> was at $14.36 an ounce against $14.30,
while platinum <XPT=> was at $1,249 an ounce against $1,243.50
and palladium <XPD=> was at $270 against $272.
(Additional reporting by Martina Fuchs; Editing by James Jukwey)
