* Commodities, equities edge higher on recovery hopes
* U.S. inflation data flat in July versus June
* Silver hits 2-month high at $15.16 an ounce
(Recasts, adds comment, updates prices, details)
By Martina Fuchs
LONDON, Aug 14 (Reuters) - Gold rose in Europe on Friday as
the dollar slipped versus a basket of currencies after U.S. July
inflation data showed U.S. consumer prices were flat from the
previous month, but fell by the most year-on-year since 1950.
Spot gold <XAU=> was bid at $956.70 an ounce at 1318 GMT,
against $953.50 an ounce late in New York on Thursday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange rose $2.70 to $959.20.
"The recent move higher is because of the weak dollar, that
is helping to support (prices)," said Calyon analyst Robin Bhar.
"CPI was in line with consensus. I wouldn't argue that gold is
significantly higher, but it is consolidating."
The dollar <.DXY> extended losses after a government report
showed U.S. consumer prices were flat in July over June but fell
over the past 12 months by the most since 1950, which helped
push gold higher. []
Gold typically moves in a close inverse relationship with
the U.S. currency, as it becomes cheaper for holders of other
currencies as the dollar weakens.
Gold is particularly sensitive to inflation data, as it is
also often bought as a hedge against rising consumer prices.
Standard Bank analyst Walter de Wet said the data showed little
inflationary pressure in the market.
"From an immediate perspective, there is little pressure on
gold price," he said. "The longer term expectations are still in
the market that inflation could rise, but clearly not in the
next couple of months."
The precious metal drifted off its highs of the day,
however, as crude prices pared gains and U.S. stock futures
turned negative after the data. Gold is often bought as a hedge
against oil-led inflation. [] []
Elsewhere U.S. industrial production rose more than expected
in July, the Federal Reserve said, supporting hopes the longest
recession since the 1930s was ending. []
Investors were keeping an eye on the numbers for further
clues on whether the economy is improving, after a smaller than
expected fall in July payrolls last week and an upbeat statement
from the Federal Reserve earlier in the week helped sentiment.
Consumer confidence figures from the University of Michigan
are due to be released at 1355 GMT.
On the demand side, the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust <GLD>, was flat
at 1,065.49 tonnes on Thursday, having seen an outflow of 29
tonnes in the last four weeks. []
Among other precious metals, silver <XAG=> was lifted to a
two-month high due to the rise in gold prices and a sharp rally
in copper in Asia overnight. []
It jumped to a two-month high of $15.16 an ounce earlier in
the session and was later bid at $15.03 an ounce against $15.00.
Analysts said silver is benefiting from hopes the economic
downturn may be bottoming out, lifting industrial demand for the
metal. A fall in the gold-silver price ratio to 63 from 72 a
month ago suggests silver is now good value compared to gold.
"If base metals are set to move sharply higher, silver, with
its high proportion of industrial demand, could benefit too,"
said UBS analyst John Reade in a note.
"But...we are wary of the moves seen in many base metals, as
we are not expecting a strong V shaped economic recovery and
investors appear to have become too enthusiastic about the
commodity story," he added.
Among other precious metals, platinum <XPT=> was at $1,265
an ounce against $1,265, while palladium <XPD=> was at $278
against $274.
(Editing by Peter Blackburn)
