* Dollar, oil steady after lending support to gold on Monday
* Bernanke testimony eyed for impact on currencies
* Traders await outcome of South African wage talks
(Updates throughout, previous TOKYO)
By Jan Harvey
LONDON, July 21 (Reuters) - Gold steadied in Europe on
Tuesday, consolidating after the previous session's gains, as
the dollar arrested its slide versus the euro and oil prices
stabilised.
Spot gold <XAU=> was bid at $948.10 an ounce at 0910 GMT,
against $948.35 an ounce late in New York on Monday. U.S. gold
futures for August delivery <GCQ9> on the COMEX division of the
New York Mercantile Exchange eased 50 cents to $948.30 an ounce.
The metal rose above $950 an ounce for the first time since
mid June on Monday as the dollar wilted versus the European
single currency, boosting gold's appeal as an alternative asset.
With physical demand for the metal from both jewellers and
investors still sluggish over the seasonally weak summer months,
traders are awaiting fresh direction from the currency markets.
"The dollar is really going to set the momentum (for gold)
over the summer period," said Suki Cooper, an analyst at
Barclays Capital.
"When we get towards the end of August and September, we
will see physical demand picking up ahead of Diwali and ahead of
the wedding season. Prices are more likely to gain upward
momentum then."
Gold prices in India, the world's largest bullion market,
were flat as dealers awaited lower prices and the end of monsoon
season to buy. On the investment side, holdings of the largest
gold ETF, the SPDR Gold Trust <GLD>, were unchanged on Monday.
[] []
The dollar meanwhile steadied against the euro <EUR=> and a
basket of currencies <.DXY>, as caution set into the foreign
exchange markets ahead of Federal Reserve chairman Ben
Bernanke's congressional testimony later in the day. []
Bernanke will start his twice-yearly testimony, which will
continue into Wednesday, at 1400 GMT.
INFLATION HEDGE
Other commodities also steadied, with oil prices holding
just above $64 a barrel. Firmer oil prices signify rising
interest in commodities as an asset class, and can prompt buying
of gold as a hedge against oil-led inflation. []
Industrial commodities rallied across the board on Monday as
rising stock markets prompted fresh flows into assets seen as
higher risk. World stocks continued to rise on Tuesday to
approach a 9-month high. []
A firmer tone to stocks and the rising cost of industrial
commodities are fuelling fears over the prospect of inflation
further down the line, which may prompt further buying of gold.
"Future inflationary pressure... increases gold demand as a
hedge," said Fairfax analyst John Meyer in a note.
Among other precious metals, silver <XAG=> was at $13.61 an
ounce against $13.62, platinum <XPT=> was at $1,175 an ounce
against $1,180, and palladium <XPD=> was flat at $252.
South African miner Impala Platinum <IMPJ.J> said seven
workers were killed in an incident at the 14 Shaft of its
Rustenburg mine on Monday, while two others are unaccounted for.
Implats suspended the shaft after the incident. []
Gold and platinum traders will be watching the outcome of a
dispute between South Africa's National Union of Mineworkers and
mining companies over wages.
Earlier this week the NUM said strike action was possible
after it rejected an increased wage offer from Implats. Final
talks on a deal will take place on Tuesday.
(Editing by James Jukwey)
