* Gold initially pressured as dollar up on U.S. home data
* Oil rally, Wall St weakness supporting gold
* Platinum group metals dragged by expected GM bankruptcy
(Recasts, updates with quotes, closing prices, adds NEW YORK
dateline/byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 27 (Reuters) - Gold prices were a tad
higher on Wednesday as equity market weakness and an oil rally
spurred investment into bullion, balancing out the negative
effects of a firmer dollar.
Spot gold <XAU=> traded at $951.60 an ounce at 2:20 p.m.
EDT (1820 GMT), up 0.1 percent from its late Tuesday New York
quote of $951.25 an ounce.
U.S. gold futures for June delivery <GCM9> settled
unchanged at $953.30 an ounce on the COMEX division of the New
York Mercantile Exchange.
Weakness on Wall Street lifted gold from its session lows.
Stocks were 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," he said.
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 as 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."
Buying in gold as an inflation hedge increased as U.S.
crude oil futures <CLc1> climbed above a six-month high above
$63 per barrel. []
On the currency markets, the dollar strengthened after data
showed U.S. existing home sales rose 2.9 percent in April,
against a fall of 3.4 percent in March. []
A firmer dollar generally weighs on gold, which is often
bought as an alternative investment to the U.S. currency.
OPTIONS BULLISH
Trading strategies in the gold options market indicated
long-term buying interest for the underlying futures, floor
traders said.
Jonathan Jossen, a COMEX gold options floor trader, said
there was heavy buying of COMEX December $1,200 call options,
as well as increased writing of puts -- an options strategy to
profit from the upside.
Jossen also cited options buying from gold producers and
higher open interest in gold exchange-traded funds.
Silver <XAG=> was at $14.82 an ounce, up 1.9 percent from
its previous finish of $14.55. It hit a session high of $14.99
-- the highest price since August -- on strong investment
demand.
Among other precious metals, platinum <XPT=> was at
$1,127.00 an ounce, down 0.4 percent from its late Tuesday
quote of $1,132, while palladium <XPD=> was at $222.50 an
ounce, down 2.8 percent from its previous finish of $229.
Both platinum group metals were pressured by fears over the
outlook for carmakers, as General Motors <GM.N> inched closer
to bankruptcy.
The car industry accounts for half the annual consumption
of platinum and palladium. Data showed European new commercial
vehicle registrations fell 42 percent in April, year-on-year.
[]
(Editing by Walter Bagley)
