* Dollar slips as rising stock markets boost risk appetite
* Oil prices rally on back of equity rise
* SPDR ETF holdings down more than 4 percent in 4 weeks
(Updates prices, adds comment, detail)
By Jan Harvey and Martina Fuchs
LONDON, July 30 (Reuters) - Gold climbed above $935 an ounce
on Thursday, tracking hefty gains in oil, as a jump in Wall
Street equities boosted interest in assets seen as higher risk
and pushed the dollar lower versus a basket of currencies.
Gold's rise lifted prices of other precious metals, with
silver and palladium both rising nearly 2 percent.
Spot gold <XAU=> was bid at $935.85 an ounce at 1504 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 $8.80 to $936.00 an ounce.
Gold prices slipped nearly 1 percent on Wednesday as the
dollar firmed, but found good support below $930 an ounce.
"Gold held the $927 level extremely well, and today is
coming back again," said Afshin Nabavi, head of trading at MKS
Finance in Geneva. "The stock market is up, oil is up, so gold
is following."
U.S. stocks rose on Thursday as a string of solid corporate
profits and a drop in the number of Americans staying on jobless
benefits fuelled economic recovery hopes. []
The climb boosted oil prices, which rose nearly 5 percent to
their session peak amid hopes an economic recovery could benefit
demand. Rising crude prices often boost buying of gold as a
hedge against oil-led inflation. []
The dollar, the chief driver of gold, fell against a basket
of currencies as a firmer tone to world equity markets and
commodity prices eroded demand for the U.S. unit as a safe
haven. []
Gold becomes cheaper for holders of other currencies as the
dollar weakens.
Gold demand in India, the world's biggest bullion consumer,
is recovering after recent price falls, but a further decline
will be needed for buying to significantly recover.
"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. []
INVESTMENT SOFT
Investment demand for gold remained soft as ETF holdings
slipped further. Holdings of the largest bullion ETF, the SPDR
Gold Trust, fell over 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 investors
were selling out of the SPDR fund 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.
On the supply side, the world's largest gold producer,
Barrick Gold <ABX.TO>, said it produced 1.87 million ounces of
gold in the second quarter and is on track to meet its 2009
output target of 7.2-7.6 million ounces. []
Among other precious metals, silver <XAG=> tracked gold up
to $13.54 an ounce against $13.28. Spot platinum <XPT=> was at
$1,181.50 an ounce against $1,170, while spot palladium <XPD=>
was at $257.50 against $252.50.
(Additional reporting by Lewa Pardomuan in Singapore;
Editing by Sue Thomas)
