* Lack of economic confidence, dollar weakness lift gold
* Inflationary expectations should limit gold's losses
* Largest gold ETF reports 2.13-tonne outflow
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, July 22 (Reuters) - Gold futures climbed
above $950 an ounce on Wednesday on lingering economic worries,
but the U.S. Federal Reserve's strong resolve to fight
inflation could still pressure the metal in the near term.
Wall Street ended lower after largely holding firm earlier
in the session, weighed down by disappointing bank results and
a pullback in energy shares.
"There is a lack of confidence in overall economic
conditions in the financial markets, and therefore you have
gold prices supported at current levels," said Carlos Sanchez,
precious metals analyst at CPM Group in New York.
Risk-aversion demand has been largely absent in the gold
market as investors preferred the dollar and U.S. Treasury
products to bullion.
Earlier this year, the inverse link between the dollar and
gold was broken as both assets rallied amid flight-to-quality
type buying from nervous investors.
U.S. August futures <GCQ9> settled up $6.40 at $953.30 an
ounce on the COMEX division of the New York Mercantile
Exchange.
Spot gold <XAU=> was at $950.20 an ounce at 3:40 p.m. EDT
(1940 GMT), against $948.15 in its previous session finish.
Despite the U.S. Federal Reserve's commitment to battle
inflation, analysts said the price of gold could hold firm at
the current levels until inflationary expectations receded
further.
On Tuesday, Fed Chairman Ben Bernanke sought to dispel
concerns the U.S. central bank's aggressive monetary easing
could end up fueling inflation, saying he was confident the Fed
could pull back its extraordinary stimulus when the time was
right. []
The dollar <.DXY> edged lower versus a basket of six major
currencies on a steady performance in the stock market and
stronger home prices. A weaker dollar supports commodities
priced in the U.S. unit, such as gold, as it makes them cheaper
for holders of other currencies. []
Standard Bank analyst Walter de Wet said $960 an ounce was
proving to be a major resistance level for gold prices.
"I would look towards the dollar for any major moves in
gold," he said. "Our view for currencies is that the euro will
reach $1.50 towards the end of the year. If that is going to be
the case, I don't think $960 is going to hold as a strong
resistance."
Gold last stood above $960 in early June.
SOFT DEMAND
However, investment demand from gold-backed exchange-traded
funds remained weak.
The world's largest gold exchange-traded fund recorded a
further outflow on Tuesday. The fund, New York's SPDR Gold
Trust <GLD>, has sold nearly 39 tonnes of gold in the last four
weeks, equal to almost 3.5 percent of its total holdings.
[]
Jewelry demand in India, the world's largest gold consumer,
remained slack as buyers awaited lower prices, while jewelers
in Thailand cashed in their bullion on Wednesday after prices
broke through $950 an ounce.
Among other precious metals, silver <XAG=> was at $13.67 an
ounce against $13.54, platinum <XPT=> was at $1,170 an ounce
from, $1,169, and palladium <XPD=> was at $253 from $253.50.
(Editing by Christian Wiessner)
