* Dollar hits lowest since Dec as U.S. stock futures firm
* SPDR gold, iShares silver ETFs both report inflows
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, June 2 (Reuters) - Gold climbed back above $980 an
ounce on Tuesday, reversing earlier losses, as the dollar fell
to a 5-1/2 month low versus a basket of currencies, boosting
interest in bullion as a hedge against weakness in the unit.
Spot gold <XAU=> was bid at $981.70 an ounce at 1213 GMT,
against $973.95 an ounce late in New York on Monday. U.S. gold
futures for June delivery <GCM9> on the COMEX division of the
New York Mercantile Exchange rose $4.40 to $983 an ounce.
"Earlier today we had a bit of a setback from yesterday's
high and that brought some new buyers in, obviously helped by
the weaker dollar," said Saxo Bank senior manager Ole Hansen.
"All this talk about systemic risk in the dollar and where
you can hedge yourself against that means commodities will be
favoured," he said.
The dollar fell to its lowest since mid-December against a
basket of currencies on Tuesday as U.S. stock futures edged
higher, with hopes that the economy is heading for recovery
sparking buying of riskier assets. [] []
Commerzbank analyst Eugen Weinberg said in the medium term,
while weak jewellery demand and an uptick in mine output could
limit gold's gains, economic developments may support bullion
whether they are positive or negative for the wider markets.
"If equity markets are dropping, gold is a safe haven," he
said. "If they are rising, it is an inflation (hedge)."
Holdings of the world's largest gold and silver exchange
traded funds, New York's SPDR Gold Trust <GLD> and iShares
Silver Trust <SLV>, both rose on Monday. SPDR's holdings were up
15.27 tonnes at a record 1,134.03 tonnes. []
Buying of gold ETFs, which issue securities backed by
physical bullion, as a hedge against future risks such as
inflation, has been a major source of demand in recent months.
INFLATION FEARS
Market commentators fear government efforts to pump extra
liquidity into the financial system could cause a sharp rise in
inflation once an economic recovery takes hold.
Among other precious metals, silver <XAG=> was bid at $15.66
an ounce against $15.59, after touching a nine-month high of
$15.94 an ounce on Monday. Holdings of the iShares Silver Trust
<SLV> rose 260.36 tonnes on Monday.
Platinum <XPT=> was at $1,214 an ounce against $1,208.50,
while palladium <XPD=> was at $240 against $238. Both posted
gains on Monday amid hopes for a recovery in the car industry,
which accounts for half of global consumption of the metals.
"The platinum group metals rallied on hopes that GM's filing
for bankruptcy protection will eventually help it regain
competitiveness and ensure its survival as an auto producer,"
HSBC analyst James Steel said in a note.
"Additionally, Ford announced plans to increase Q3
production of autos and light trucks in expectation of greater
consumer demand. If global auto demand stabilizes, the PGMs are
likely to be supported, we believe."
(Editing by Peter Blackburn)
