* Gold rises back towards record high as dollar slips
* Dollar seen falling further after worst quarter since 2002
* Indian demand firm, but SPDR gold ETF holdings dip
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 1 (Reuters) - Gold rose back above $1,310 an
ounce in Europe on Friday as the dollar slipped to a six-month
low against the euro, with the metal supported near record highs
by expectations for further U.S. quantitative easing.
Spot gold <XAU=> was bid at $1,313.25 an ounce at 0924 GMT,
against $1,305.25 late in New York on Thursday. U.S. gold
futures for December delivery <GCZ0> rose $4.90 to $1,314.60.
Gold looks resilient after ending September with its eighth
consecutive quarterly gain, analysts say, having risen 6 percent
in the third quarter to a record $1,315.80 hit on Sept. 30.
"Despite the rejuvenating economic situation in the United
States, the general view that the Fed would be forced to pump in
economic stimulus in the form of QE 2 after the elections on
Nov. 10 is keeping bullish momentum intact," said Pradeep Unni,
senior analyst at Richcomm Global Services.
"The economic situation is so fragile that any further
deterioration in the data print may propel gold further north."
The euro extended gains on Friday to hit a six-month high
against the dollar after upbeat Chinese data encouraged risk
taking in higher-yielding currencies and as Asian central banks
were seen recycling dollars into the euro. []
Dollar weakness tends to benefit gold, as it boosts gold's
appeal as an alternative asset and makes dollar-priced
commodities cheaper for holders of other currencies. With the
U.S. currency seen extending losses to the end of the year, gold
is expected to benefit.
"The U.S. dollar had its worst month since May 2009 against
a basket of currencies and its worst quarter since April 2002,
as it continued to come under pressure over concerns that the
Federal Reserve is poised to fire the starting gun on further
asset purchases," said CMC Markets analyst Michael Hewson.
"Early indications suggest that these US dollar declines
look set to continue for now as we head into a new month, and
the final quarter of 2010, as the U.S. dollar index heads back
towards levels last seen in January this year."
TECHNICALS POSITIVE
On the physical side of the market, a Singapore-based trader
reported firm gold demand from Thailand and India, where buyers
appear to be becoming acclimatised to record-high prices.
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, dipped however by just
under 1 tonne to 1,304.776 tonnes. []
From a technical perspective, gold looks poised for further
strong gains, according to Reuters' Singapore-based market
analyst Wang Tao. He expects prices to rise to $1,539 per ounce
over the next three months. []
Elsewhere, silver <XAG=> was bid at $21.93 an ounce against
$21.70. The metal has outperformed gold this year, rising 30
percent against gold's 20 percent climb.
However, UBS analyst Edel Tully said in a note that silver
may be more vulnerable to a near-term correction than gold.
"Much of silver's move having been technically driven, the
gold/silver ratio this week pulling back below 60 for the first
time since October last year may convince many buyers to take
profit," she said.
"A pullback would be particularly unsurprising because
silver is notoriously volatile, its price regressions typically
being a lot more violent than gold's."
"On the other hand, mounting QE expectations ahead of the
Nov. 3 FOMC meeting should support gold, which will also help
silver," she added. "And silver has also seen decent industrial
demand as well as investor buying."
Platinum <XPT=> was at $1,670 an ounce against $1,651.15,
while palladium <XPD=> was at $572 against $563.93.
(Reporting by Jan Harvey; Editing by Sue Thomas)
