* Dollar hits session highs vs euro after German ZEW data
* SPDR Gold Trust ETF holdings edge higher
* GFMS sees gold prices correcting before push higher
(Releads, updates prices)
By Jan Harvey
LONDON, Sept 15 (Reuters) - Gold eased on Tuesday as the
dollar firmed versus the euro, but remained supported near
$1,000 an ounce by expectations rising inflation and dollar
weakness may spark a move higher after the metal consolidates.
Spot gold <XAU=> was bid at $996.10 an ounce at 1124 GMT
against $998.65 late in New York on Monday.
Prices have held onto the bulk of gains that last week took
the metal to 18-month highs of $1,011.55 an ounce, but the
market needs further impetus for a fresh push higher. Both the
currency and physical markets are being closely eyed.
"We are now entering a period when gold is usually stronger
on a seasonal basis," said Peter Fertig, a consultant at
Germany's Quantitative Commodity Research
"Typically the dollar is weak against the euro in the last
quarter, so seasonal factors are still arguing that this is just
a consolidation, and that gold is likely to move further upwards
towards all-time highs."
Gold prices were pressured in early trade as the dollar
firmed against the euro <EUR=> after soft German ZEW economic
sentiment data. []
Dollar strength dampens interest in bullion as an
alternative asset, and makes it more expensive for non-U.S.
investors. []
Downward pressure on the precious metal was eased, however,
by a recovery in oil prices, which recovered after edging lower
early in the session on concerns over an inventory build in the
United States. []
Gold tends to track moves in crude prices, as it can be
bought as a hedge against oil-led inflation.
CORRECTION EYED
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange eased $3.40 to
$997.70 an ounce.
In an update to its 2009 Gold Report, metals consultancy
GFMS said late on Monday that gold prices are likely to correct
after their recent run higher, but could rebound as high as
$1,100 an ounce in the next six months. []
"The market has been driven up very much by short term
speculation," said GFMS chairman Philip Klapwijk. "We've seen
net long positions on the COMEX reach record levels on the 8th
of this month and position length has only grown since then."
"On the other hand, I think the dollar is looking a little
bit oversold," he added. "I think we are going to see a fairly
significant correction take place in the gold price in the short
term."
Gold bugs were cheered by a 1.221-tonne rise in holdings of
the largest gold-backed exchange-traded fund, New York's SPDR
Gold Trust <GLD>, after five sessions of stability. []
They are also hoping for an uptick in jewellery demand from
key markets such as India and the Middle East, which has been
weak this year as local gold prices in many areas rose.
Among other precious metals, silver <XAG=> was at $16.45 an
ounce against $16.51. Platinum <XPT=> was at $1,304 an ounce
versus $1,313.50 and palladium <XPD=> at $290 versus $291.
Platinum has held firm despite the news that a strike has
been averted at major producer Anglo Platinum in South Africa.
"That platinum prices remained stable even after the removal
of a strike threat may be an indication of underlying bullish
sentiment," said HSBC analyst James Steel in a note.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
