* Dollar falls versus the euro after Israel report
* Inflation concerns in UK, emerging markets mount
* Coming Up: FOMC minutes from Jan. 25-26 meeting 1900 GMT
(Recasts, adds comment, updates prices)
By Jan Harvey and Sue Thomas
LONDON, Feb 16 (Reuters) - Gold rose to a one-month high on
Wednesday as the dollar fell against the euro after Israel said
two Iranian warships planned to sail through the Suez Canal en
route to Syria.
Israel's foreign minister called the move the latest
"provocation" by Tehran and hinted at an Israeli response.
Traders said the dollar was being sold on the view that this
could be a security threat for Israel. [] []
Spot gold <XAU=> hit a peak of $1,381.40 an ounce after
Israel's announcement before trimming gains.
The metal was bid at $1,380.70 an ounce at 1711 GMT, against
$1,372.95 late in New York on Tuesday.
"It's probably had some implications for the safe-haven
aspects of gold -- but you also have to factor in the currency
move," RBS analyst Daniel Major said.
"It may have had some impact but gold is pretty much ...
back to where it was this morning."
The metal remained in a relatively narrow trading range as
tension in the Middle East and concerns over the inflation
outlook underpinned prices, while better appetite for
higher-yielding assets curbed fresh buying interest.
"There are a number of conflicting signals for what is
usually driving gold," said Peter Fertig, a consultant at
Quantitative Commodity Research. "This is currently leading to a
bit more sideways trading."
U.S. data on Wednesday showed both housing starts and the
producer price index for January came in above expectations,
which prompted treasuries to pare gains.
Core PPI showed a 0.5 percent month on month rise in
January, above expectations for a 0.2 percent increase.
Equity markets were supported on Wednesday by positive
corporate earnings reports. [] []
Dollar watchers are now awaiting the release of the Federal
Open Market Committee's minutes of its Jan. 25-26 meeting on
monetary policy at 1900 GMT.
ETF OUTFLOWS STEADY
Gold prices are also taking some support from a reduction in
outflows from physically backed exchange-traded funds, whose
gold holdings fell significantly in January.
Holdings of the largest, New York's SPDR Gold Trust <GLD>,
eased to a nine-month low on Tuesday, but outflows this month so
far are well below January's levels. []
"Easing investor ETF outflows after a substantial January
pullback helped to keep the new short-term uptrend intact," said
VTB Capital analyst Andrey Kryuchenkov in a note.
Demand in number one gold consumer India was light, with
many buyers absent for a local holiday.
However, the winter harvesting season, which is expected to
leave more disposable income with gold-buying rural households,
is under way, while the marriage season has also started and
will last through May. []
Meanwhile, an Industrial and Commercial Bank of China
executive said Chinese demand for physical gold and gold-related
investments is growing at an "explosive" pace and is set to
remain robust amid inflation concerns. []
On the supply side of the market, African Barrick Gold
<ABGL.L> said it expects to produce 700,000-760,000 ounces of
gold in 2011, as it announced better-than-expected financial
results. []
Among other precious metals, silver <XAG=> was at $30.88 an
ounce against $30.76. Platinum <XPT=> was at $1,829.49 an ounce
against $1,827.24, while palladium <XPD=> was at $836.47 against
$835, having touched a 10-year high at $847 on Tuesday.
(Additional reporting by Melanie Burton; editing by James
Jukwey)
