* Gold holds ground underpinned by firmer oil
* Weak equities support buying of gold as an alternative
* Dollar treads water ahead of U.S. data
(Recasts, updates throughout, changes dateline, pvs
SINGAPORE)
By Jan Harvey
LONDON, July 29 (Reuters) - Gold was steady in Europe on
Tuesday as oil prices firmed and equities weakened, but the
metal's failure to spike higher after weekend attacks dampened
enthusiasm, traders said.
Gold <XAU=> ticked up to $929.00/930.00 an ounce at 0956 GMT
from $928.45/929.65 late in New York on Monday.
Firmer oil prices and a weaker tone to the dollar suggest
gold will be well supported this session, Calyon metals analyst
Robin Bhar said.
"We are seeing some financial market concerns, with the
Merrill writedown overnight," he added. "That is spooking the
market, so potentially we could get some flows into bullion on
the safe haven, flight-to-quality argument."
Investors were disappointed on Monday by gold's failure to
see more safe-haven buying in the wake of weekend bomb attacks
in Turkey and India, two major gold-buying areas. But the metal
is benefiting from equity market weakness on Monday.
European stocks fell in early trade after investment bank
Merrill Lynch <MER.N> unveiled a $5.7 billion writedown related
to bad debt, fuelling fears over the health of the U.S.
financial system. []
However, the weakness in stocks has not been able to set a
clear direction for gold. The metal has traded within a narrow
range of just over $3 an ounce so far on the day as the market
awaits fresh direction from the energy and forex markets.
The dollar has remained relatively steady against the euro,
giving little impetus. Gold tends to trade in the opposite
direction to the U.S. currency, for which it is often bought as
an alternative investment. []
Gold's other main external driver, oil, ticked higher,
pulling gold in its wake, as tensions in Iran and Nigeria
fuelled supply worries. []
"On the oil front, prices bounced off a seven-week low
following militant attacks on Royal Dutch Shell's oil pipelines
in Nigeria's Niger Delta," Standard Bank said in a note.
"This heightened uncertainty around supply should support
precious metal today."
Traders are looking ahead to tomorrow's inventory data from
the U.S. Department of Energy to give new direction to the
market.
A rise in oil prices often benefits gold, as the precious
metal is typically bought as a hedge against oil-led inflation.
Until there are significant moves in oil and the dollar,
prices are set to remain within ranges, analysts said, with
physical buying muted during the low-demand summer season, and
exchange-traded funds' holdings now largely steady after recent
gains.
The market is therefore awaiting the release of fresh U.S.
economic data to give fresh direction to trade.
U.S. Undersecretary of the Treasury David McCormick is due
to speak on energy at 1630 GMT in Washington, while U.S.
consumer confidence data for July is also due at 1400 GMT.
However, the market is chiefly awaiting U.S. data due later
in the week, including GDP numbers and initial jobless claims on
Thursday, and, especially, non-farm payrolls, construction
spending and auto sales data on Friday.
Among other precious metals, spot platinum <XPT=> hit its
highest level in almost a week at $1,775 an ounce, before easing
back to trade at $1,760.00/1,780.00 against $1,763.00/1,783.00
late in New York.
Spot palladium <XPD=> rose to $386.50/394.50 an ounce from
$385.50/393.50 late in New York. Silver <XAG=> was little
changed at $17.46/17.52 an ounce from $17.46/17.52 late in New
York.
(Reporting by Jan Harvey; Editing by Michael Roddy)
