* Weaker oil prices pressure gold
* ECB seen cutting rates by 25-50 bps
* SPDR Gold Trust holdings rise to record
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Jan 15 (Reuters) - Gold was steady in Europe on
Thursday as traders awaited the European Central Bank's interest
rate announcement later in the day, which could put pressure on
the euro and consequently on gold.
Spot gold <XAU=> rose to $810.70/812.70 an ounce at 1015 GMT
from $810.55 in New York late on Wednesday.
The ECB is widely expected to cut rates for the fourth month
in a row by between 25 and 50 basis points as dismal economic
data raises the prospect of a prolonged recession.
The decision should have a significant effect on the foreign
exchange markets, and consequently on gold.
"A lot is still influenced by euro/dollar," Wolfgang
Wrzesniok-Rossbach, head of sales at precious metals group
Heraeus, said.
The dollar was firmer versus the euro in early trade, with
the single currency eroded by a spate of poor economic news. The
ECB announcement is at 1245 GMT. []
"All eyes will be on the ECB's interest rate decision,"
Standard Bank analyst Walter de Wet said. "Standard Bank expects
a 50 bps cut. This, combined with increased risk aversion since
the start of the week...should continue to support the dollar."
A firmer dollar usually pressures gold, which is often
bought as an alternative investment to the U.S. currency.
Lower oil prices are also weighing on gold. Bullion
typically moves in the opposite direction to crude, as it is
often bought as an inflation hedge, and the direction of the oil
market is an indicator of interest in commodities.
Oil fell more than 2 percent or $1 a barrel after bleak
figures from world markets pointed to weak demand.
[]
However, investor interest in gold remains strong. Bullion
holdings of the SPDR Gold Trust in New York, the world's largest
gold-backed exchange-traded fund, rose to a record for the
second time this year. []
Demand for gold in India, the world's largest bullion
market, was also picking up as prices fall, dealers said.
Rahul Gupta, director at Delhi-based PP Jewellers, said he
expected demand to spurt due to lower prices as the wedding
season, which starts mid-January, gets underway. []
SOUTH AFRICAN SUPPLY DIPS
On the supply side, South African gold output fell 8.7
percent in volume terms in Nov 2008 from a year before. The
country's gold output has fallen since the electricity grid
suffered a near collapse last January. []
The market is awaiting the second update of an annual market
report from metals consultancy GFMS, due at 1500 GMT, for
further guidance on gold supply and demand.
Among other precious metals, spot silver <XAG=> was quoted
at $10.45/10.53 an ounce against $10.54 late in New York on
Wednesday.
Platinum and palladium prices fell, with the spate of poor
economic data from the United States and Europe pressuring all
industrial metals.
The platinum group metals, which are mainly used in car
manufacturing, have fallen dramatically from their highs of
early 2008 as the auto sector has come under pressure.
"There is a danger in platinum if the sales misery continues
in the car industry that we might go even lower, even though the
production side is going down as well," Wrzesniok-Rossbach said.
Spot platinum <XPT=> slipped to $916.50/921.50 an ounce from
$933 late in New York on Wednesday, while palladium <XPD=> fell
to $174.50/179.50 an ounce from $180.50.
(Editing by Sue Thomas)
