* Dollar slips as equities firm, boosting risk appetite
* World Gold Council says gold demand rises 38 percent in Q1
* But India's Q1 gold imports slide 83 percent
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, May 20 (Reuters) - Gold rose in Europe on Wednesday,
supported by a weaker dollar and firmer oil prices, with a
report showing a jump in first-quarter gold demand also
supporting appetite for bullion.
But rising stock markets and growing optimism the economic
downturn may be bottoming out remain a threat to prices,
analysts said.
Spot gold <XAU=> was bid at $927.85 an ounce at 0948 GMT,
against $924.65 an ounce late in New York on Tuesday. The dollar
edged lower, boosting the metal's appeal as an alternative
asset, while oil rose above $60 a barrel. [] []
"What we are seeing now is probably due to the weaker dollar
and also somewhat higher oil prices," Commerzbank analyst Eugen
Weinberg said. "But I don't think (the rise) is sustainable as
long as sentiment stays as upbeat as it is."
"Before, gold was considered as an insurance against risk,"
he added. "People at the moment are not looking for insurance.
Risk aversion is disappearing, and people are becoming more
upbeat about the future."
European shares rose in early trade on Wednesday and were on
course for a fifth day of gains, while world stocks rose for a
fourth straight session. [] []
The VIX volatility index <.VIX>, known as the "fear gauge",
fell to its lowest levels since the collapse of Lehman Brothers
in September, suggesting investors are less worried about swings
in equity prices. []
Volatility in the equity markets was a key factor driving
investment in gold as a safe haven earlier in the year.
Gold demand rose 38 percent in the first three months of
2009, the World Gold Council said on Wednesday, as sharply
higher investment offset weaker jewellery buying and industrial
usage. []
WGC investment research manager Rozanna Wozniak said in an
interview with Reuters television she expects investment demand
for gold to remain firm as investors seek a safe store of value
for their money.
CONCERNS
"I have some concerns over how long these green shoots (of
recovery) will last," she said. "It would be great if they did,
but I think overall the uncertainty is going to remain for a
while yet," Wozniak said.
India's gold imports fell 83 percent in the first quarter to
17.7 tonnes a year, the WGC said. Indian gold demand was
depressed by high prices in that period, according to traders.
[]
"The Indian market has always been very sensitive to price
levels and price volatility," Wozniak said, adding she hoped to
see stronger demand in the second quarter in the run-up to the
wedding season.
Platinum and palladium, mainly used by carmakers as
components in autocatalysts, firmed, helped by rising gold
prices and upbeat sentiment as traders, refiners and miners met
for London's Platinum Week.
Refiner Johnson Matthey said in a key report on Monday that
strong Chinese jewellery demand was helping offset weakness in
automotive buying. []
Platinum <XPT=> was quoted at $1.146.50 an ounce against
$1,137.50 late in New York on Tuesday, while palladium <XPD=>
was at $232.50 against $231.
Prices of fellow platinum group metal rhodium <RHOD-LON>
rose $50 to $1,400 an ounce, and are up nearly 6 percent so far
this week. Silver <XAG=> was at $14.18 an ounce against $14.15.
(Editing by Sue Thomas)
