* Dollar weakens further; euro eyes $1.50
* Crude oil hits 12-month high above $79 a barrel
* Gold demand wilts in India after festival season
(Updates prices, adds comment, detail)
By Jan Harvey
LONDON, Oct 19 (Reuters) - Gold prices held above $1,050 an
ounce on Monday as the dollar hovered near 14-month lows against
the euro, but weakness in physical demand is limiting further
gains in the precious metal after last week's record high.
Spot gold <XAU=> was bid at $1,052.50 an ounce at 1436 GMT
against $1,050.80 late in New York on Friday. U.S. gold futures
for December delivery <GCZ9> on the COMEX division of the New
York Mercantile Exchange rose $2.10 to $1,053.60 an ounce.
Demand for physical gold was lacklustre as the festival
season in major bullion consumer India came to an end, with
near-record prices curbing appetite for the metal.
"Technically, charts have reached an overbought zone, and
this, along with demand dip in physical markets, is an
indication of a correction," said Pradeep Unni, a senior analyst
at Richcomm Global Services.
"The markets have been dull post-Diwali and demand was quite
lacklustre, with prices scouting around all-time high levels."
The euro remained near a 14-month high against the dollar,
with the U.S. currency under pressure from expectations U.S.
interest rates will remain low well into next year. []
Dollar weakness was identified by analysts as the primary
driver behind gold's rally to record highs last week.
Commodities priced in dollars become cheaper to non-dollar
investors as the U.S. currency weakens.
"If the dollar continues weakening, we ought to see a test
of $1,072," said Afshin Nabavi, head of trading at MKS Finance.
Strength in bellwether commodity crude oil in early trade
also lifted interest in gold as a hedge against oil-led
inflation, and in commodities as an asset class, analysts said.
Oil prices rose above $79 a barrel on Monday to their
highest in 12 months, though they later pared gains. U.S.
earnings could be a key driver of oil this week, as investors
try to gauge the strength of the global economic recovery. []
RESULTS EYED
European shares rose 1 percent on Monday, boosted by a rise
in banking stocks and a firmer tone to commodities. U.S. stocks
were flat after opening higher [] []
The equity markets are awaiting fresh direction from
corporate earnings, with results due from U.S. heavyweights
Apple Inc <AAPL.O> and Texas Instruments <TXN.N>. []
Some have speculated a decline in stock markets linked to
poor third-quarter earnings may give some respite to the
beleaguered dollar, thus weighing on gold. []
Physical demand for the metal was lacklustre on Monday, with
holdings of the largest gold exchange-traded fund, the SPDR Gold
Trust <GLD>, flat for a seventh session on Friday. []
European gold ETFs saw outflows last week. London's ETF
Securities said holdings of its ETFS Physical Gold <PHAU.L>
exchange-traded commodity fell 11.5 percent on Friday, and
Zurich Cantonal Bank also reported a weekly dip in holdings.
[] []
Gold buying in India, the world's biggest bullion consumer
last year, slowed to a trickle as the festival season came to an
end, while scrap supply crept up in some Asia regions as high
prices encouraged sales. [] []
Among other precious metals, silver <XAG=> was bid at $17.48
an ounce against $17.41, platinum <XPT=> at $1,346 an ounce
versus $1,347, and palladium <XPD=> at $329 versus $326.50.
Palladium prices have risen some 9 percent in the last four
months, beating gold's 5 percent gains and a 1.4 percent rise in
platinum prices in the same period.
The metal is benefiting from expectations industrial demand
for the autocatalyst material will recover if an economic
recovery picks up steam, fears over the availability of
stockpiled Russian metal and firm investment buying.
ETF Securities' palladium-backed ETC <PHPD.L> added nearly
12,000 ounces of metal to its holdings last week, lifting them
2.3 percent to a record 540,566 ounces. Holdings of its platinum
ETC reached their highest level in 15 months.
(Editing by Sue Thomas)
