* Dollar treads water, keeping gold in holding pattern
* ECB seen holding rates; Trichet speech eyed
* Profit taking sets in in platinum group metals
(Updates throughout, previous TOKYO)
By Jan Harvey
LONDON, Aug 6 (Reuters) - Gold held below $965 an ounce in
Europe on Thursday, supported by overall softness in the dollar,
with traders awaiting direction from an interest rates decision
from the European Central Bank due later in the session.
While the ECB is widely expected to leave rates unchanged at
1 percent, the markets will be closely following an accompanying
statement from the bank's chief Jean-Claude Trichet for clues on
future interest rate policy.
Spot gold <XAU=> was bid at $963.45 an ounce at 0841 GMT,
against $961.95 an ounce late in New York on Wednesday. U.S.
gold futures for December delivery <GCZ9> on the COMEX division
of the New York Mercantile Exchange fell 10 cents to $966.20.
"Gold has installed a $955-970 trading range since the
beginning of August. The supporting factor is once again the
dollar, which weakened against other majors," said Alexander
Zumpfe, a trader at precious metals house Heraeus.
"Against the euro, the dollar is currently caught around
$1.44, and as long as this continues, I don't think that gold
will break through one or the other side of its range.
"This is in line with the oil price, which is overall
trading on a firm tone, but not able to move significantly
higher," he added.
The euro was steady versus the dollar on Thursday as traders
awaited direction from the ECB decision at 1145 GMT and
Trichet's statement in Frankfurt at 1230 GMT. []
If the dollar slips further against the European currency,
it is likely to prompt investors to turn to hard assets such as
bullion. A decline in the U.S. unit will also make dollar-priced
commodities like gold cheaper for other currency holders.
Interest in bullion will also be influenced by moves in
equities, in which a slide precipitated selling of gold late on
Wednesday. European shares rose in early trade ahead of the
policy announcements from the ECB and Bank of England. []
OUTPUT RISES
In supply news, Gold Fields <GFIJ.L>, the world's number
four gold producer, said its output of the metal rose 4 percent
in the fourth quarter while production costs fell 6 percent to
$512 an ounce. []
On the demand side, buying of gold to back exchange-traded
funds remains slack, with holdings of the SPDR Gold Trust <GLD>,
the largest bullion ETF, unchanged for a fifth day on Wednesday.
Sales in the world's main gold jewellery market, India, were
also lacklustre as banks were shut by a strike. []
Among other precious metals, silver <XAG=> was at $14.78 an
ounce against $14.64.
The world's largest silver producer, Fresnillo <FRES.L>,
said its board had approved a pre-feasibility study for the
development of its Saucito project in Mexico, which could
produce up to 9 million ounces of silver a year.
This is equivalent to more than 1.3 percent of annual global
production, which stood at 680.9 million ounces last year.
Platinum <XPT=> was at $1,281 an ounce against $1,282.50,
while palladium <XPD=> was at $276 against $273.
Traders took profits in both metals after they hit
multi-month highs on Wednesday amid talk of a strike at South
African power company Eskom.
"Profit taking has been seen this morning (in palladium) and
traders will be looking to see if platinum can break higher,
potentially giving the metal fresh upside momentum," said James
Moore, an analyst at TheBullionDesk.com.
"We still remain concerned about the level of speculative
longs in the market," he added. "However the metal is on course
to target the $300-308 level."
(Editing by James Jukwey)
