* Dollar weakness, inflation expectations lift gold
* SPDR gold ETF reports further outflow on Friday
* Platinum reaches 16-month high at $1,581 an ounce
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Jan 11 (Reuters) - Gold prices rose 1.7 percent in
Europe on Monday to a five-week high of $1,157.70, benefiting
from weakness in the dollar as traders bet on U.S. interest
rates staying low in the immediate future.
Spot gold <XAU=> was bid at $1,157.40 an ounce at 1037 GMT,
against $1,137.90 late in New York on Friday. U.S. gold futures
for February delivery <GCG0> on the COMEX division of the New
York Mercantile Exchange rose $19.00 to $1,157.90 an ounce.
"The dollar is playing a big role this morning, threatening
to break through $1.43 against the euro," said Walter de Wet, an
analyst at Standard Bank.
"But also with the Chinese data out, people are expecting a
faster recovery in global growth, which could see some gold
buying for those who believe it is an inflation hedge."
Growth in China's imports and exports last month beat
expectations, providing fresh evidence of economic recovery. One
analyst said the trade data suggested December industrial output
grew by more than 25 percent from a year earlier.
[]
The U.S. dollar dropped afresh on Monday after suffering its
biggest fall in six weeks in the wake of disappointing U.S. jobs
data on Friday and comments from a Federal Reserve official that
U.S. interest rates are likely to stay low for some time. []
Weakness in the U.S. unit boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
Other commodities rose on the back of the dollar's decline,
with oil jumping more than 1 percent and base metals also
climbing. Industrial commodities are benefiting from
stronger-than-expected Chinese import data. [] []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
The upbeat Chinese data also helped lift equities, with
Asian stocks hitting a 17-month high and energy and mining
stocks leading European shares higher in early trade. []
[] []
In India, historically the world's largest gold consumer,
physical offtake abated as prices rose to a three-week high.
Dealers say they expect demand to return at around 16,700-16,800
per ten grams, though prices are currently above 17,000 rupees.
[]
OUTFLOW
In New York, the world's largest gold-backed exchange-traded
fund reported a near-4 tonne outflow on Friday. []
Its holdings slipped just over 14 tonnes or 1 percent in the
first trading week of the new year, compared with a rise of more
than 7 tonnes in the same period of 2009.
Deutsche Bank said in a research note it expects inflows
into precious metals exchange-traded products (ETP) to slacken
this year as investors divert attention to more volatile
commodities.
"We don't expect extreme outflows from precious metals
ETPs," it said. "However, growth rates are likely to be slower
than 2009."
Among other precious metals, silver <XAG=> tracked gold
higher to $18.76 an ounce against $18.44.
Platinum <XPT=> touched a 16-month high of $1,581 an ounce
and was later at $1,580 against $1,574.50, while palladium
<XPD=> was at $428 against $425.50.
Both platinum and palladium have benefited from the launch
of the first U.S.-based ETPs backed by the metals on Friday.
"We think platinum is poised to substantially benefit from
increased investment demand given its already favorable
fundamental outlook," said Morgan Stanley in a note.
Platinum group metals traders will be closely eyeing news on
global car sales for clues as to future demand for the
autocatalyst materials.
Industry figures released on Monday showed China's auto
sales surged past the United States to reach record levels in
2009, underscoring China's importance to the global auto
industry as the world's biggest market. []
(Reporting by Jan Harvey; Editing by Anthony Barker)
