* Rise in gold trust holdings lends some support
* Stocks rise, euro holds gains
(Recasts, updates prices and comments)
By Humeyra Pamuk
LONDON, May 28 (Reuters) - Gold drifted lower on Friday as
the dollar gained and as an initial improvement in risk appetite
curbed its safe-haven appeal, although palladium rose to its
highest in over a week.
The euro slipped against the dollar in a choppy session as
weaker-than-expected U.S. data tempered risk appetite, weighing
on stocks and triggering modest selling of the single currency
after early gains. European shares, which were up for most of
the day, turned negative after the U.S. data. [] []
U.S. data showing consumer spending was unexpectedly flat in
April, its weakest reading since September, weighed on the euro
after stocks fell. [].
Fears of a crisis in the eurozone that could derail the
region's already-fragile economic recovery sparked a sell-off
across other commodities earlier this week but boosted gold, as
investors dumped riskier asset in search for safety.
Spot gold <XAU=> was quoted at $1,206.40 an ounce at 1504
GMT versus $1,211.10 an ounce late in New York on Thursday. The
safe-haven rally had driven it to a record high of $1,248.95 an
ounce two weeks ago.
"A stronger dollar could be one explanation," said Eugen
Weinberg, analyst at Commerzbank said. "I think gold's a little
bit overbought at the moment, the fear seems to be leaving the
market and some-profit taking in these circumstances is very
logical," he said.
Bullion also found modest fundamental support from a rise in
holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, to a new record, showing global
appetite for less risky investments continues. []
Analysts do not expect a big fall in bullion. "People still
holding it, they haven't gotten out," said Rory McVeigh, trader
at Commerzbank. "They're going to hold it to wait and see where
the price action with the euro goes."
Benchmark U.S. gold futures for June delivery <GCM0> on the
COMEX division of the New York Mercantile Exchange was down by
$6.4 at $1,205.5 an ounce.
India's gold imports fell an annual 39 percent in May, as
record prices hit demand in the world's top consumer at a time
when sales were expected to rise because of a key Hindu
festival. []
FOCUS ON PGMS
"The focus more perhaps is on the white metals; platinum and
palladium rather than gold," said Nick Moore, global head of
metals strategy at RBS, referring to platinum group metals (PGM)
which have seen volatile trade since the start of the year.
[]
Spot platinum <XPT=> was at $1,560 an ounce after rising to
$1,569 an ounce, its highest since May 20 and versus $1,561 an
ounce late in New York on Thursday while spot palladium <XPD=>
was at $466.50 an ounce versus Thursday's $462 an ounce.
It earlier hit $467.03 an ounce, its highest since May 19.
Carmakers account for around half of annual demand for the
metals for use in autocatalysts. Strength in Chinese car sales
and a recovery in U.S. automotive demand early this year have
especially benefited palladium. []
The news on the increase in the amount of metal allowed on
the platinum and palladium ETFs had also given a boost to the
metals, said Rory McVeigh, Commerzbank trader said.
Silver <XAG=> was at $18.34 an ounce versus $18.45 an ounce.
(Additional reporting by Jim Regan in Sydney; editing by Keiron
Henderson)
