* Dollar falls to 2-week low vs currency basket, oil rises
* SPDR gold ETF sees outflow, but iShares silver ticks up
(Updates throughout, changes dateline-pvs TOKYO)
By Jan Harvey
LONDON, July 15 (Reuters) - Gold firmed towards $930 an
ounce in Europe on Wednesday as the dollar slipped sharply
against a basket of currencies and risk appetite picked up while
oil prices rose more than $1 a barrel.
Traders are awaiting consumer price inflation data from the
United States due later in the session to give fresh direction
to trade, analysts said.
Spot gold <XAU=> was bid at $929.80 an ounce at 0917 GMT,
against $924.60 an ounce late in New York on Tuesday.
"Momentum seems to be on gold's side at the moment," said
Citigroup analyst David Thurtell. "If we can hold $924 today, we
will probably see gold zip higher to the mid-$930 region later
on in the week."
The dollar slipped to a two-week low against a basket of
currencies on Wednesday, as currencies seen as higher risk
benefited from a more upbeat tone to the markets after strong
earnings from Goldman Sachs and Intel the previous day. []
The euro-dollar exchange rate moved back through $1.40 an
ounce as risk appetite improved, a level that had previously
seen strong support for gold. The precious metal becomes cheaper
for holders of other currencies as the dollar weakens.
Healthier risk appetite also boosted assets such as equities
and other commodities. European stocks rose to a two-week high
in early trade, tracking gains in Asia. [] []
"At the moment the linkage between risk appetite and the
U.S. dollar is clear - the U.S. dollar rallies when equities are
under pressure and vice versa," said UBS analyst John Reade in a
note.
"If this were to change, such that the dollar were to fall
during a period of risk aversion, then gold could do very well
indeed, as the two buying forces - risk aversion and a hedge
against the USD - would then be combined rather than opposing."
He said this was only likely to happen, however, if
confidence were lost in the dollar as a reserve asset, which is
seen as unlikely.
ASSET CLASS
Oil meanwhile rose above $60 a barrel, lifted by data that
showed crude oil and gasoline stockpiles fell last week, as well
as gains on other markets. Base metals also climbed, showing
strong interest in commodities as an asset class. [] []
Traders are awaiting the release of the U.S. June consumer
price index, a key inflation gauge, at 1230 GMT.
The figures could have an impact on the currency markets,
which may impact gold, while signs of rising inflation may boost
interest in bullion as a hedge against rising prices.
However, demand for physical gold from jewellers and to back
exchange-traded funds was lacklustre. The largest gold ETF, New
York's SPDR Gold Trust <GLD>, saw an outflow of more than 15
tonnes or 1.4 percent on Tuesday.
Jewellery demand in the world's largest bullion consumer,
India, was also sluggish as buyers awaited lower prices. "There
could be more buying if prices decline below the $900 an ounce
level," said one dealer in a state-run bank. []
Meanwhile silver <XAG=> was at $13.11 an ounce against
$12.88. Holdings of the largest silver ETF, the iShares Silver
Trust <SLV>, rose 42 tonnes to a record on Tuesday.
[]
Among other precious metals, platinum <XPT=> was at $1,143
an ounce against $1,127.50, while palladium <XPD=> was at $243
against $241.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
