* Dollar weakens versus the euro, boosting interest in gold
* ETF interest eyed after outflows in January
* Anglo American counsels working together on SAfrican power
(Updates prices)
By Jan Harvey
LONDON, Feb 2 (Reuters) - Gold prices rose above $1,110 in
Europe on Tuesday, extending the previous session's 2 percent
gains, as the dollar weakened versus the euro, prompting buying
of the precious metal as an alternative asset.
Spot gold <XAU=> was bid at $1,112.90 an ounce at 1225 GMT,
against $1,105.30 late in New York on Monday. U.S. gold futures
for February delivery <GCG0> on the COMEX division of the New
York Mercantile Exchange rose $11.40 to $1,115.00 an ounce.
Gold is recovering some of last week's losses after the euro
regained some lost ground against the dollar. Strength in the
U.S. unit makes dollar-priced commodities more expensive for
holders of other currencies.
"The recent gain of the last two days has been largely
dollar driven," said RBS Global Banking & Markets analyst Daniel
Major. "After dollar strength last week, we have had a bit of a
recovery in the euro."
He said an outflow of investment from gold exchange-traded
funds was a risk factor for prices.
"After having very impressive inflows during most of last
year, we saw 23 tonnes of redemptions from the family of gold
exchange-traded funds in January," he said. "That is not
particularly positive."
Holdings of the world's largest gold ETF, New York's SPDR
Gold Trust, were unchanged on Monday, but fell 21.7 tonnes in
January, against a rise of 63.36 tonnes in the same month a year
before. []
The dollar edged lower versus the euro <EUR=> on Tuesday as
Greek government bond spreads over German benchmarks narrowed,
and weakened a touch versus a basket of major currencies. []
Currency traders are awaiting the appearance of White House
adviser Paul Volcker before the Senate Banking Committee at 1430
GMT to defend the administration's proposal to curb risk-trading
by banks, which sparked a wave of risk aversion last week.
OIL FIRMS
The financial markets are also awaiting key U.S. non-farm
payrolls data and interest rate decisions from the European
Central Bank and Bank of England later in the week. []
Among other commodities, oil prices rose nearly 1 percent,
while base metals prices firmed. Gold tends to track crude
prices, as the metal can be bought as a hedge against oil-led
inflation. [] []
Silver <XAG=> was bid at $16.74 an ounce against $16.64. The
largest silver-backed ETF, the iShares Silver Trust <SLV>,
reported a 29-tonne outflow on Monday. []
Platinum <XPT=> was at $1,553.50 an ounce against $1,548.50,
while palladium <XPD=> was at $437.50 against $428.50.
The head of miner Anglo American <AAL.L> said on Monday that
South Africa's mining sector needs to work closely with utility
Eskom to find ways of cutting power consumption in the face of
planned steep rises in electricity prices. []
Anglo American is the parent company of the number one
platinum miner Anglo Platinum <AMSJ.J>. Analysts have pointed to
potential power-related constraints on supply as a possible
supportive factor for platinum prices this year.
Societe Generale said in a report late on Monday that it
sees platinum at an average $1,565 in 2010, with further gains
capped in part by weakness in jewellery demand.
"We continue to expect some further mild price strength in
the second quarter of the year as the auto sector in particular
continues to recover," it said.
"But -- subject of course to potential stresses in the South
African mining sector in particular -- we adhere to our view
that the re-rating of platinum's price, with its doubling from
its late 2008 low, is complete," it added.
(Editing by Sue Thomas)
