* Gold supported by weaker dollar, higher crude oil
* US trade gap widens for first time in eight months
* Silver ETF holdings increase
(Recasts, updates with details, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Veronica Brown
NEW YORK/LONDON, May 12 (Reuters) - Gold ended 1 percent
higher on Tuesday as a weaker dollar and a wider U.S. trade gap
prompted fund buying and bolstered the status of bullion as an
alternative investment.
Traders said gold's rise was largely driven by the dollar
weakness, which helped prop up the metal's appeal as an
alternative investment.
Spot gold <XAU=> traded at $922.05 an ounce at 2:19 p.m.
EDT (1819 GMT), up 1 percent from its late Monday quote of
$912.60 in New York.
U.S. gold futures for June delivery <GCM9> settled up
$10.40, or 1.1 percent, at $923.90 an ounce on the COMEX
division of the New York Mercantile Exchange.
Bullion found support as the U.S. currency fell to a
four-month low against a basket of currencies after data showed
the U.S. trade gap widened for the first time in eight months,
boosting investor risk appetite. [].
George Gero, vice president of RBC Capital Markets Global
Futures, said that the U.S. trade gap news increased prices of
energy and other commodities and bolstered investment interest
in hard assets such as metals.
The rally in bullion -- often used as a hedge against
market uncertainty and sometimes as a barometer of investor
attitudes toward risk -- also came as oil and stock markets
rose in the hope that the global economic slump may have
bottomed out. []
World shares, measured by MSCI's all-country index,
initially hit a six-month high on Monday <.MIWD00000PUS>. Oil
moved to its highest price this year of more than $60 per
barrel <CLc1>.
Analysts have said gold prices are trapped between opposing
forces as the precious metal's role as a hedge against economic
uncertainty vies with perceptions that the economic downturn
might be moderating.
"There's a lot of uncertainty still even though we have
seen 'green shoots' rallies in equities, but is that the start
of a recovery or a bounce in an otherwise bear trend? This is
the great unknown," said James Moore, analyst at
TheBullionDesk.com.
ETF HOLDINGS STABLE
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings stood at 1,104.09 tonnes
as of May 11, unchanged from the previous business day.
[]
Silver <XAG=> tracked gains in gold, rising to $14.21 an
ounce, up 2.2 percent from its previous finish of $13.91 late
in New York on Monday.
ETF Securities said its silver-backed ETF <PHAG.L> saw an
inflow of more than 700,000 ounces on Monday, lifting its total
holdings by 3.9 percent to a record 18.702 million ounces.
[]
The company's head of research, Nicholas Brooks, said
silver was benefiting along with other industrial precious
metals from expectations the economic downturn may be bottoming
out.
"People are looking at silver as a precious metal, but also
a play on the cyclical upturn," he said. "It is really getting
a substantial boost, and we are starting to see that in our ETC
inflows."
Among other precious metals, spot platinum <XPT=> was at
$1,127.50 an ounce, up 1.2 percent from its late Monday quote
of $1,114.50, and spot palladium <XPD=> was at $232.50 an
ounce, down 0.4 percent from its previous finish of $233.50.
(Reporting by Frank Tang; additional reporting by Jan Harvey;
editing by Jim Marshall)
