* Holdings of SPDR gold ETF <XAUEXT-NYS-TT> unchanged
* Higher oil reflecting potential inflationary pressures
* U.S. housing starts fall to record lows in April
(Adds comment, updates prices)
By Veronica Brown and Jan Harvey
LONDON, May 19 (Reuters) - Gold was firmer in Europe on
Tuesday as an unexpected fall in U.S. housing starts to record
lows in April sharpened risk aversion, supporting the metal's
appeal as a safe store of value.
Weakness in the dollar is also underpinning prices.
Spot gold stood at $924.80 per ounce <XAU=> by 1513 GMT
compared with $917.20 quoted late in New York on Monday. U.S.
gold futures for June delivery <GCM9> on the COMEX division of
the New York Mercantile Exchange rose $4.40 to $926.10 an ounce.
New U.S. housing permits and starts unexpectedly fell to
record lows last month, a government report showed, denting
expectations stability in the housing market was imminent.
Gold touched a high of $927.40 in the wake of the data.
"Gold still seems to be caught amidst heightened risk
aversion and rising optimism in the global equity markets," said
Richcomm Global Services senior analyst Pradeep Unni.
A better appetite for stocks is diverting some investment
for bullion, analysts said. U.S. stocks turned positive on
Tuesday after earlier losses. []
Weakness in the dollar, which is being dragged lower by
renewed optimism over the global economy, is supporting gold,
however. The precious metal is often bought as an alternative
investment to the U.S. currency. []
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 Barclays Capital analyst Suki Cooper.
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.
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.
SHORT-TERM WOBBLE?
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 ScotiaMocatta in London.
Platinum <XPT=> rose to $1,137 from $1,128.50, boosted by
news U.S. President Barack Obama would propose the most
aggressive increase in U.S. auto fuel efficiency ever, which
could lift usage of the metal to clean auto emissions.
The policy initiative would directly regulate emissions for
the first time and resolve a dispute with California over
cleaner cars. [].
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 [].
Spot silver <XAG=> was quoted at $14.01 an ounce <XAG=> from
$13.72 late on Monday, while palladium was at $231 compared with
$226.50 <XPD=>.
(Editing by James Jukwey)
