PRECIOUS-Gold firms as oil rises, dlr weakens

                                
 
                                
 * Spot gold firms to $921.25 per ounce <XAU=>
                                
 * Holdings of SPDR gold ETF <XAUEXT-NYS-TT> unchanged
                                
 * Higher oil reflecting potential inflationary pressures
                                
 * U.S. housing data at 1230 GMT eyed
                                
 
                                
 (Changes dateline, byline, adds quotes, updates prices PVS
TOKYO)
                                
 
                                
 By Veronica Brown
                                
 LONDON, May 19 (Reuters) - Gold rose in Europe on Tuesday,
holding around the $920 mark, in tandem with rising oil prices
which hit a 6-month high above $60 a barrel [O/R].
                                
 Dollar weakness against the euro and a basket of six leading
currencies <.DXY> also underpinned bullion -- making it cheaper
for non-U.S. buyers. But stronger global stock markets limited
gains, taking heat out of its role as a refuge from turmoil.
                                
 Spot gold stood at $921.10 per ounce <XAU=> by 1030 GMT
compared with $917.20 quoted late in New York on Monday. The
market touched a one week low on Monday at $915.05.
                                
 While the prices of some raw materials have moved lock-step
with sentiment on stock markets, some investors have plugged
into gold to hedge equally against potential for the positive
mood to sour and inflationary problems posed by quantitative
easing.
                                
 "Broadly what we've seen is an increase in non-commercial
long positions from tactical investors and broader currency
related movements," said Suki Cooper, analyst at Barclays
Capital.
                                
 She cited CFTC data for the week ending May 12, showing
non-commercial positions in U.S. Comex gold futures rising
primarily on the back of fresh long positions being established.
                                
 "There is also some positioning from a longer term
inflationary perspective," she added.
                                
 Global share prices extended gains <.MIWD00000PUS>, with a
stronger than expected improvement in German economic sentiment
encouraging investors to make more forays into so-called riskier
assets.
                                
 The Mannheim-based ZEW economic think tank's monthly poll of
economic sentiment rose to 31.1 from 13.0 in April, in a
possible signal that the economic crisis may be abating. 
                                
 But a separate gauge of current conditions fell to -92.8
from -91.6, registering its weakest reading since July 2003.
[ID:nLJ943634]

                                
 SHORT-TERM WOBBLE?
                                
 April data on U.S. housing starts and building permits is
due at 1230 GMT on Tuesday, which economists think will show
housing starts rose to 0.52 million from 0.51 million in March,
according to a Reuters poll.
                                
 On Friday bullion hit a seven-week high of $933.65 per ounce
after data showed U.S. core inflation in April rose more than
expected. 
                                
 But short-term, the market could see some seepage after
several failed attempts to capture and hold the $925 mark.
                                
 "Gold was overbought and failed in the low $930s again
yesterday, so needs a correction," said Simon Weeks, director of
gold sales at Scotia Mocatta in London.
                                
 U.S. gold futures for June delivery <GCM9> inched up 0.1
percent to $921.60 per ounce, compared with Monday's settlement
of $921.70 an ounce on the COMEX division of the New York
Mercantile Exchange.
                                
 Investors have been neither adding or withdrawing money from
gold-backed funds in the past few days, with holdings at the
world's largest gold-backed ETF, SPDR Gold Trust <GLD>,
unchanged at 1,105.62 tonnes from May 18. [GOL/SPDR]
                                
 Spot platinum <XPT=> rose to $1,135.00, boosted by news that
U.S. President Barack Obama on Tuesday would propose the most
aggressive increase in U.S. auto fuel efficiency ever -- a move
that could lift prospects for the metal's usage to clean auto
emissions.
                                
 The policy initiative would directly regulate emissions for
the first time and resolve a dispute with California over
cleaner cars. [ID:nN18364500].
                                
 On the investment front, ETF Securities' platinum-backed
exchange-traded commodity saw inflows of 3,246 ounces on Monday,
recovering slightly after hefty outflows of nearly 43,000 ounces
last week. 
                                
 London is playing host to the annual Platinum Week
gathering. For a TAKE-A-LOOK, see [ID:nLF825216].
                                
 Its silver-backed product, meanwhile, rose again, up 0.7
percent to a fresh record level of 19.262 million ounces. The
product's holdings have risen nearly 1.5 million ounces in the
last two weeks.
                                
 Spot silver was quoted at $13.89 an ounce <XAG=> from $13.72
late on Monday, while palladium was at $230.00 compared with
$226.50 <XPD=>.
                                
  (Reporting by Veronica Brown)