* Dollar weakens vs euro as share prices rebound
* SPDR, iShares ETFs reach record levels
(Updates throughout, changes dateline, pvs TOKYO)
By Jan Harvey
LONDON, Jan 16 (Reuters) - Gold rose in Europe on Friday as
the weaker dollar and interest in bullion as a haven from risk
lifted the precious metal from the one-month low it hit in the
previous session.
Spot gold <XAU=> was quoted at $823.90/825.90 an ounce at
1057 GMT, up from $817.45 late in New York on Thursday. U.S.
gold for February delivery <GCG9> on the COMEX division of the
New York Mercantile Exchange was up $16.90 at $824.20.
"Risk aversion is high," said Commerzbank analyst Eugen
Weinberg. "People are looking at gold right now as a real hedge
against everything, an alternative asset."
Turmoil in the banking sector, which saw shares of Bank of
America and Citigroup fall sharply on Thursday, is increasing
investor jitters and further supporting gold, he added.
"The more problems we see in the banking sector and the
financial sector in general, the more attractive gold as a hedge
against such risk will be," he said.
Weakness in the dollar is also supporting gold. The euro and
higher-yielding currencies gained against the U.S. unit as
equities rebounded, buoyed by optimism after the U.S. government
pledged to provide fresh financial aid to Bank of America.
[]
A softer dollar tends to benefit gold, which is often bought
as an alternative asset to the U.S. currency.
Traders are awaiting a series of U.S. data due later in the
session, including December inflation and industrial production
numbers, to give fresh direction to trade.
"While precious metals might have a quiet day in Asia and
Europe, U.S. trading could once again prove to be volatile, with
a busy data day. Most notable is U.S. CPI," said Standard Bank
analyst Walter de Wet.
"The market expects headline inflation to be in negative
territory year on year."
"The release of the University of Michigan consumer
confidence data and the TIC data... could prove an important
driver for the dollar today," he added.
GOLD, SILVER ETFs HIT RECORD
Investment demand for physical gold remains strong as
turmoil in the financial markets and fears over the outlook for
the global economy boost bullion's appeal.
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust, said its holdings rose to a fresh record
on Thursday of 795.25 tonnes. []
Demand for physical gold from ETFs has been a major factor
supporting prices in recent years. In December, SPDR overtook
the Bank of Japan as the world's seventh largest holder of gold.
The world's largest silver-backed ETF, the iShares Silver
Trust, said its holdings climbed 1 percent to a record 7,143.27
tonnes on January 14. []
Strength in demand for silver bullion from ETFs is helping
to outweigh falling demand in other areas, analysts said.
"From an industrial perspective demand is quite weak, but I
don't think people are focusing on that as much as where the
dollar is likely to go, and where gold is likely to go," said
Standard Chartered analyst Daniel Smith.
Spot silver <XAG=> tracked gold higher to $10.73/10.81 an
ounce from $10.58.
Among other precious metals, platinum and palladium were
steady, benefiting from gold's strength and the dollar's
weakness but picking up little fresh momentum as traders
continue to worry about the outlook for demand.
Spot platinum <XPT=> edged up to $935/940 an ounce from
$922.50 an ounce late in New York on Thursday, while spot
palladium <XPD=> was at $181/186 an ounce from $177.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
