* Dollar eases as risk appetite revives, lifting gold
* SPDR ETF holdings down more than 4 percent in 4 weeks
(Updates throughout, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, July 30 (Reuters) - Gold firmed on Thursday as the
dollar eased against a basket of currencies, with rebounding
stock markets and reassuring comments from China's central bank
boosting appetite for currencies seen as higher risk.
But the move failed to pick up momentum as traders worried
about underlying demand for the metal, after the largest gold
exchange-traded fund reported another 10-tonne outflow.
Spot gold <XAU=> was bid at $932.00 an ounce at 0930 GMT,
against $929.00 an ounce late in New York on Wednesday. U.S.
gold futures for August delivery <GCQ9> on the COMEX division of
the New York Mercantile Exchange rose $4.60 to $931.80 an ounce.
"The dollar is weak and I think this is going to continue
today," Citigroup analyst David Thurtell said.
He said traders would be focusing on U.S. initial and
continuing job claims data due on Friday. "I expect (the data)
to get better and better, another reason why the dollar might
continue to weaken," he said.
The dollar retreated from two-week highs against the euro,
helped by a recovery in equity markets. Chinese stocks rebounded
from the last session's 5 percent fall after a central banker
said China's loose monetary policy would not be reversed. []
European shares rose meanwhile as investors digested a raft
of broadly positive earnings. Firmer stock markets are lifting
appetite for assets seen as higher risk, such as higher-yielding
currencies and commodities. []
Oil steadied after slipping almost 6 percent on Wednesday
after data showed a jump in U.S. crude stocks. Firmer crude
prices can support gold, which can be used as a hedge against
oil-led inflation. []
Gold demand in India, the world's biggest gold consumer, is
recovering after recent falls in price, but a further decline
will be needed for jewellery buying to firm significantly.
"There are advance orders in decent quantities in the range
of $900-920 an ounce," said one dealer with a state-run bank.
Overall demand in India remains weak, however. The country's
gold imports have reached a provisional 8-10 tonnes in July so
far, well below the 24 tonnes recorded last June, the Bombay
Bullion Association said. []
ETF HOLDINGS SLIP
Investment demand for gold remained soft, however, as ETF
holdings slipped further.
The world's largest bullion ETF, the SPDR Gold Trust <GLD>,
said its holdings declined more than 10 tonnes on Wednesday, and
are down nearly 48 tonnes in the last four weeks. []
Jason Toussaint, managing director for exchange-traded gold
with the World Gold Council, said there was evidence that
investors were selling out of the SPDR fund to raise liquidity
to buy shares.
Analysts fear a broader liquidation of ETF gold holdings
resulting from a recovery in risk appetite could jeopardise
gold's gains.
"Without strong physical demand to absorb metal coming back
into the market and with funds cutting long exposure, the metal
is at risk of a deeper correction," said TheBullionDesk.com
analyst James Moore.
Among other precious metals, silver <XAG=> tracked gold up
to $13.34 an ounce against $13.28. Spot platinum <XPT=> was at
$1,171.50 an ounce against $1,170, while palladium <XPD=> was at
$251.50 against $252.50.
The platinum group metals have ticked higher in recent
sessions, trading at multi-week highs early in the week, but
gains have been driven by speculation rather than underlying
demand, dealers said.
(Additional reporting by Martina Fuchs in London and Lewa
Pardomuan in Singapore; Editing by Sue Thomas)
