* Dollar retreats, stocks slip after U.S. durable goods data
* World Gold Council sees gold demand increasing in 2010
* First inflow seen into largest silver ETF since early July
(Updates prices, adds comment)
By Jan Harvey
LONDON, Aug 25 (Reuters) - Gold rose for a second day on
Wednesday to an eight-week high above $1,240 an ounce as the
dollar fell against the euro and concern over economic growth
hit equities, fuelling interest in the metal as a safe haven.
Spot gold <XAU=> was bid at $1,240.10 an ounce at 1317 GMT,
against $1,229.25 late in New York on Tuesday. U.S. gold futures
for December delivery <GCZ0> rose $8.40 to $1,241.80, while gold
priced in euros and sterling also hit multi-week highs.
The precious metal is benefiting from renewed demand for a
haven from volatility in assets seen as higher risk, like
equities, after a recovery in risk appetite in July and early
August led prices to retreat from June's record highs.
"This recent leg-up and the quite significant move yesterday
post the U.S. housing data is perhaps that trend of safe haven
inflows into gold resuming," said RBS analyst Daniel Major.
Prices rallied to a high of $1,241.20 an ounce as European
equity markets were rattled by data showing new orders for
long-lasting U.S. manufactured goods rose far less than expected
in July. U.S. stock futures extended losses. [] []
Industrial commodities also lost ground, with oil slipping
lower and base metals easing. [] []
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The euro <EUR=> swung back into positive territory against
the dollar after the data, having earlier come under pressure on
worries about widening peripheral sovereign bond spreads after
the previous day's downgrade of Ireland's credit rating. []
A weaker dollar usually translates into higher gold prices,
as it lifts the metal's appeal as an alternative investment and
makes dollar-priced assets cheaper for other currency holders.
Gold priced in euros <XAUEUR=R> hit its highest since July 1
at 981.06 euros an ounce and was later bid at 980.04 euros an
ounce against 973.59 euros. Sterling-priced gold <XAUGBP=R>
reached its highest since mid-July at 803.40 pounds, before
easing to 802.70 pounds from 797.96 pounds.
INVESTMENT FIRM
Any further signs of weakness in the U.S. economy could
spell further gains for gold, analysts said.
"We could definitely see further price rises if the economy
proves not to be that robust," said Commerzbank analyst Daniel
Briesemann. He said rising demand for gold as an investment
product, as outlined in a World Gold Council report released on
Wednesday, suggested further support for prices.
"The seasonally stronger demand period is going to start
now," he said. "In India, for example, we should see rising
imports in gold until the end of the year due to the festival
season, which started yesterday. That should help gold."
The WGC said in its quarterly demand trends report on
Wednesday that India and China were likely to provide the main
thrust to demand growth this year and predicted investment
demand would stay strong. []
It reported burgeoning bullion investment in the second
quarter, notably from Europe, seat of the euro zone sovereign
debt crisis. Demand for gold exchange-traded funds quintupled in
the quarter, it said.
Spot silver <XAG=> rose more than 2 percent to $18.77 an
ounce from $18.34, extending gains after posting its biggest
one-day rise in more than three weeks on Tuesday, echoing the
climb in gold prices.
Holdings of the world's largest silver-backed ETF, New
York's iShares Silver Trust <SLV>, rose for the first time since
July 13 that day, climbing just over 24 tonnes to 9,175.38
tonnes. []
Platinum <XPT=> was at $1,517.50 an ounce against $1,510,
while palladium <XPD=> was at $489 against $482.50.
(Reporting by Jan Harvey; Editing by Sue Thomas)
