* Speculation mounts that Egypt's Mubarak may step down soon
* Rising dollar adds pressure to gold prices
* Platinum group metals ease from multi-year highs
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 10 (Reuters) - Gold edged higher on Thursday as
speculation Egyptian President Hosni Mubarak was to step down
imminently arrested early losses in the metal, but prices
remained under pressure from the firmer dollar and sharper risk
appetite.
Spot gold <XAU=> was bid at $1,364.20 an ounce at 1632 GMT,
against $1,362.89 late in New York on Wednesday. U.S. gold
futures for April delivery <GCJ1> was off 60 cents at $1,364.90.
The metal earlier slipped as low as $1,350.25 an ounce as
the dollar firmed and after upbeat U.S. jobs data reinforced
investor optimism over the outlook for growth, eroding some
appetite for perceived safe-havens.
It later pared losses among heavy speculation Mubarak was
set to step down as early as tonight after days of protests in
Egypt against his rule. []
"Mubarak is another reason to cover shorts," said Afshin
Nabavi, head of trading at MKS Finance in Geneva.
The dollar <.DXY> rose after U.S. government data showed new
claims for unemployment benefits dropped more than expected last
week to a 2-1/2 year low. []
A stronger dollar tends to pressure gold, as it curbs its
appeal as an alternative asset and makes dollar-priced
commodities more expensive for holders of other currencies,
though the relationship has weakened in the last year.
The gold price has fluctuated between $1,340 and $1,370 this
week, awaiting fresh direction, while Asian consumer buying has
been light following the Lunar New Year holidays.
While there are currently few incentives to buy gold, given
improving appetite for higher risk assets and rising bond
yields, few investors seem prepared to sell heavily.
The world's largest gold exchange-traded fund, New York's
SPDR Gold Trust <GLD>, reported a small outflow on Wednesday,
signalling that investment is still lacklustre. []
"Since the beginning of the year we have seen outflows from
the ETFs. We have seen lower risk aversion day by day, and today
the stronger dollar seems to be also taking its toll," said
Commerzbank analyst Eugen Weinberg.
"We are still very bullish in the longer term and believe
new all-time highs are very possible towards the end of the
year. But at the moment, gold seems to not be the favourite.
During economic recovery, other metals are in stronger demand."
ASIAN DEMAND SOFT
In India, the world's largest consumer of physical gold,
demand remained soft as buyers awaited fresh price falls.
Dealers said suppliers hiked premiums charged on London prices
to $2.20-$2.50 as availability was limited by supply issues
after heavy snowfalls in refining areas. []
Demand in number two consumer China was also muted after the
Lunar New Year holiday. Although the festival officially ended
on Wednesday, most buyers in China are not expected to return to
the market until Monday, dealers said.
Silver <XAG=> was bid at $30.22 an ounce against $30.17, up
0.2 percent on the day. Platinum <XPT=> was at $1,839.25 an
ounce against $1,853.49, while palladium <XPD=> was at $822.22
against $826.47.
Platinum reached its highest in 2-1/2 years on Wednesday and
palladium a 10-year peak, amid expectations that rising car
demand would lift consumption of the autocatalyst metals. Supply
issues were also supportive, analysts said.
"Platinum producers face high cost inflation driven by
rising labour and power costs and the impact of (rand)
appreciation," said Sanford Bernstein in a note.
"Platinum prices, unlike other commodities, have also been
relatively flat, resulting in falling margins, returns and cash
flows. In the short term, low profits and cash flows limit...
producers' ability and willingness to invest in new projects."
"We believe that supply constraints and likely demand
recovery make platinum an attractive commodity in the mid- to
long-term," it said.
(Additional reporting by Amanda Cooper; editing by William
Hardy)
