* Euro extends gains versus the dollar, lifting gold
* Crude oil, base metals rise as more money reaches commods
* U.S. palladium, platinum ETP inflows stall
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Feb 17 (Reuters) - Gold prices rose above $1,120 an
ounce to their highest in two weeks as the euro extended the
previous session's gains versus the dollar, prompting fresh
investment flows into the precious metal.
Spot gold <XAU=> was bid at $1,119.15 an ounce at 1010 GMT,
against $1,118.95 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ0> on the COMEX division of the New York
Mercantile Exchange rose $2.60 to $1,121.90 an ounce.
"Investment demand from the United States and a lack of
selling out of Asia are pushing gold up," said Standard Bank
analyst Walter de Wet, adding that a fall in net long positions
in New York gold futures suggested gold had room to rise.
"For most of these commodities, speculative length has
declined substantially, so there is room for more money to flow
in," he said.
The euro firmed against the dollar on Wednesday, extending
the previous session's gains, as traders covered short positions
in the single European currency as the flow of news about
Greece's fiscal problems stalled for the moment. []
Gold rose late last week on fears over the outlook for
debt-laden Greece, which knocked the euro sharply lower versus
the dollar. It broke its usual inverse correlation with the
dollar as both benefited from risk aversion.
Gold is on course for a 3.8 percent rise in February, its
first monthly increase since November.
European ministers on Tuesday took a tough stance on Greece,
telling Athens it may need to take further steps to brings its
ebts under control, but analysts said a lack of developments had
led investors to trim bets the euro. []
Gold's relationship with the dollar has now been
re-established. 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.
"The dollar would need to have a definite pull-back to
give... impetus to gold, even though it is still appealing as a
hedge against default risk," said VTB Capital analyst Andrey
Kryuchenkov in a note.
OIL CLIMBS
Among other commodities, base metals firmed and oil prices
rose 50 cents a barrel, extending the previous session's 3.9
percent gains towards $78 a barrel. []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
Commodities also benefited from a return in risk appetite,
as reflected in a rise in equity markets. European stocks
advanced for a third straight session on Wednesday, after Asian
shares climbed to a three-week high. [] []
The World Gold Council said in its hotly-anticipated Gold
Demand Trends report for the fourth quarter of 2009 that
investment appetite for gold was expected to stay firm, though
overall gold demand fell 11 percent in 2009. []
India remained the world's number one gold consumer, it
said, with fourth-quarter consumption rising 13 percent to 180.7
tonnes year-on-year as wedding and festive demand peaked.
On the supply side, the world's number three gold miner
AngloGold Ashanti <ANGJ.J>, said output in the fourth quarter
was slightly lower at 1.18 million ounces owing to safety
stoppages at mines in South Africa. []
Among other precious metals, silver <XAG=> was at $16.18 an
ounce against $16.12, platinum <XPT=> was at $1,542.50 an ounce
against $1,118.95, and palladium <XPD=> at $433 against $430.50.
Holdings of the platinum and palladium exchange-traded
products operated by the U.S. arm of London's ETF Securities
were flat on Tuesday, plateauing after early strong inflows.
(Reporting by Jan Harvey; Editing by Amanda Cooper)
