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SINGAPORE)
LONDON, June 17 (Reuters) - Gold was steady after Monday's
sharp gains as the dollar languished against the euro and oil
held above $130 a barrel, with traders awaiting U.S. economic
data to give fresh market direction.
Gold <XAU=> was at $883.00/884.00 an ounce at 0934 GMT,
steady from $883.60/884.80 an ounce late in New York on Monday,
when it jumped as high as $894.70 an ounce on a weaker dollar.
Traders are turning their attention to inflation and will be
closely looking at data on the U.S. producer price index for
May, which is due at 1230 GMT.
Also potentially impacting the dollar will be numbers for
May housing starts and building permits, due at the same time,
and industrial production data due at 1315 GMT.
These are expected to show a decline in construction and
industrial production activity, which could argue against a hike
in interest rates.
"The impact on gold will depend on whether the market puts
more emphasis on the inflation or the economic activity data,"
said Dresdner Kleinwort consultant Peter Fertig in a note.
While a rise in inflation could benefit the dollar by
increasing the likelihood of a rate hike, it is also likely to
spur buying of gold as a hedge against rising prices.
"Increasing interest in inflation across all major regions
is now starting to play on people's minds," said Merrill Lynch
analyst Daniel Hynes.
"Oil is a major inflationary factor and it is obviously
placing more pressure on the budgets of consumers in the U.S.,
which is going to weigh on the U.S. dollar," he added.
"Higher-than-expected inflation would probably support gold,
but that is going to be capped by the possibility of rate
hikes."
Financial authorities in both Europe and the U.S. have
expressed concern over rising inflation in recent weeks, chiefly
spurred by a sharp rise in oil prices.
Oil rallied to a new all-time high of $139.89 a barrel on
Monday on the back of a weaker dollar and ongoing concerns over
falling supply and tightening stockpiles.
Though prices have eased a touch this morning, they remain
firmly above $130 a barrel, stoking inflation fears.
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Silver <XAG=> edged up to $17.23/17.29 an ounce from
$17.16/17.22 late in New York on Monday, when it jumped to a
one-week high of $17.40 due to a weaker dollar and gains in
gold.
Spot platinum <XPT=> rose to $2,046.00/2,066.00 an ounce
from $2,038.50/2,058.50 late in New York.
Spot palladium <XPD=> edged up to $459.00/464.00 an ounce
from $456.50/464.50. It hit a high of $460 an ounce on Monday,
its strongest level since April 18.
(Reporting by Jan Harvey: Editing by Peter Blackburn)
