* Dollar inches higher on ECB interest rate comments
* ETF demand for gold little changed
* Platinum group metals await fresh news on GM
(Updates throughout, changes dateline - pvs TOKYO)
By Jan Harvey
LONDON, May 27 (Reuters) - Gold held below $950 an ounce in
Europe on Wednesday, under pressure from a slight uptick in the
dollar and a recovery in stock markets that diverted some
investment from bullion.
Spot gold <XAU=> was bid at $949.05 an ounce at 0902 GMT,
against $951.25 an ounce late in New York on Tuesday.
"In Asian trading, the dollar index recovered slightly,
which led to profit taking in gold," said Peter Fertig, a
consultant at Quantitative Commodity Research.
"Stock markets are indicating economic improvement, which
also plays a role," he added. Nonetheless, it is the dollar
which is setting the tone for trade, he said. []
The U.S. currency edged higher against the euro on Wednesday
after a European Central Bank official said further interest
rate cuts cannot be ruled out. []
The dollar had already received some support after a
two-year U.S. debt sale on Tuesday was met with solid demand,
easing worries about investor appetite for U.S. debt.
A firmer dollar generally weighs on gold, which is often
bought as an alternative investment to the U.S. currency.
Strength in the unit also makes dollar-priced gold more
expensive for holders of other currencies.
Currency traders will be eyeing U.S. housing data due out
later in the session for their impact on the dollar. Existing
homes sales numbers are due out at 1400 GMT.
Longer term, analysts say gold may benefit from rising U.S.
inflation once the economy begins to recover. While at present
the environment is still largely deflationary, this could change
rapidly once economic activity picks up.
"Inflation is perhaps not the tune of this year, as demand
remains weak despite all those green shoots," said VTB Capital
analyst Ivan Ivanchenko. "But given how fast the environment is
changing, inflation may come much faster than many expect."
Other commodities lent little direction to gold. Oil and
most base metals prices inched higher after U.S. consumer
confidence data released on Tuesday boosted the appeal of
industrial raw materials. [] []
UNDERLYING DEMAND
Underlying demand for gold remained relatively quiet, with
holdings of the largest bullion-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, little changed on Tuesday. []
Physical gold demand in the world's largest bullion market,
India, remained sluggish meanwhile as high prices deterred
buyers, traders said.
Elsewhere silver <XAG=> was at $14.48 an ounce against
$14.55. The metal is tracking gold lower but is likely to be
supported by strong investment demand, analysts said.
Among other precious metals, platinum <XPT=> was quoted at
$1,136 an ounce against $1,132 late in New York on day, while
palladium <XPD=> was at $228.50 against $229.
"Platinum is still holding in a tight range and resistance
at $1,160 has proven to be very robust indeed," said VTB
Capital. "More sideways trading is in store, with $1,080 being
the bottom of the range."
The metals are suffering from the downturn in the car
industry, which accounts for half their annual consumption. Data
showed European new commercial vehicle registrations fell 42
percent in April year-on-year on Wednesday. []
In the United States, General Motors Corp <GM.N> is facing
the fallout from a failed debt exchange, which has sent the
carmaker closer to a bankruptcy filing expected at the end of
the month. []
(Reporting by Jan Harvey; Editing by Keiron Henderson)
