* Dollar extends gains after U.S. home sales data
* Platinum group metals await fresh news on GM
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By Jan Harvey
LONDON, May 27 (Reuters) - Gold was steady just above $950
an ounce on Wednesday as weakness in the equity markets, which
diverted investment into bullion, helped balance the negative
effects of a firmer dollar.
Spot gold <XAU=> was bid at $950.80 an ounce at 1415 GMT,
against $951.25 an ounce late in New York on Tuesday.
Weakness in the stock markets after the opening of New York
trade lifted gold from lows of $941.25. Stocks are suffering
from a retreat in risk appetite, which had sharpened on Tuesday
after an upbeat report on U.S. consumer confidence.
"We might see a bit of risk aversion coming back after
yesterday's good reading from the consumer confidence index,"
said Standard Bank analyst Walter de Wet.
"The markets probably overran a bit. It was a good figure,
but it was only one figure."
U.S. stocks opened lower on Wednesday as General Motors
<GM.N> inched closer to bankruptcy. []
On the currency markets, the dollar extended gains against
the euro after data showed U.S. existing home sales rose 2.9
percent in April against a fall of 3.4 percent in March. []
The dollar had already firmed earlier in the session after a
European Central Bank official said further interest rate cuts
could not be ruled out, and as a two-year U.S. debt sale on
Tuesday was met with solid demand.
A firmer dollar generally weighs on gold, which is often
bought as an alternative investment to the U.S. currency.
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 $14.55 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
$1,128.50 an ounce against $1,132, while palladium <XPD=> was at
$224 against $229, both pressured by fears over the outlook for
carmakers.
The car industry accounts for half annual platinum and
palladium consumption. Data showed European new commercial
vehicle registrations fell 42 percent in April year-on-year on
Wednesday. []
The board of General Motors <GM.N> is due to meet to review
options after confirming a crucial bond exchange has fallen
short of its goal to cut debt and avoid bankruptcy.
[]
(Reporting by Jan Harvey; Editing by Keiron Henderson)
