* Gold pressured as dollar recovers from five-month low
* Increase in gold ETF holdings signals fund interest
* Platinum weak because of short trades
(Recasts, updates with quotes, closing prices, changes
dateline, pvs LONDON)
By Frank Tang
NEW YORK, May 26 (Reuters) - Gold dropped on Tuesday as a
stronger dollar prompted profit taking, but the first notable
rise in the bullion holdings of gold-backed exchange-traded
funds in recent months indicated investment interest.
The dollar rebounded after last week's sharp fall, curbing
interest in bullion as an alternative asset, and a Wall Street
rally dampened bullion's safe-haven demand.
Spot gold <XAU=> traded at $953.15 an ounce at 2:28 p.m.
EDT (1828 GMT), down 0.5 percent from $957.80 an ounce late on
Monday but well off an earlier low of $940.10.
U.S. gold futures for June delivery <GCM9> settled down
$5.60 at $953.30 an ounce on the COMEX division of the New York
Mercantile Exchange.
The dollar was firmer but pared gains against the euro
after data showed a key measure of consumer confidence rose in
May. The Conference Board's U.S. consumer confidence index rose
to 54.9 in May from 40.8 in April, beating expectations for
42.0. []
Meanwhile, gold exchange-traded fund holdings firmed a
touch after a period of stability, boosting hopes that funds
and institutional investors will like bullion prices, traders
said.
"The gain in the U.S. ETFs, which is the first considerable
gain since late March, is backing up the gains that we have
seen in the European ETFs," said Tom Pawlicki, precious metals
and energy analyst at MF Global.
On Friday, holdings of the world's largest, the SPDR Gold
Trust <GLD>, climbed to 1,118.76 tonnes, while holdings of gold
ETFs operated by Zurich Cantonal Bank and Julius Baer <BAER.VX>
also rose last week. []
"It is painting a picture that shows large fund interest is
coming into the gold market, and it probably will continue to
do so going forward," Pawlicki said.
PLATINUM IN FOCUS
Among other precious metals, silver <XAG=> was at $14.58 an
ounce, down 0.9 percent from its previous finish of $14.71,
tracking losses in gold. Platinum <XPT=> was at $1,131.00 an
ounce, down 1.6 percent from its late Monday quote of
$1,149.50, while palladium <XPD=> was at $228.50 an ounce, down
1.3 percent from its previous finish of $231.50.
Both platinum and palladium, chiefly used as components in
autocatalysts, are struggling amid auto industry turmoil.
Pawlicki said sentiment in the platinum market will be
negative, at least in the short run, as some traders start new
short positions.
United Auto Workers' union officials will gather to hear
how many U.S. factory jobs General Motors <GM.N> will cut. GM
has until June 1 to work out its issues with creditors if it is
to avoid a bankruptcy filing. []
(Additional reporting by Jan Harvey and Maytaal Angel; editing
by Jim Marshall)
