PRECIOUS-Gold steady, weak dollar supports; ETF unchanged

                                
 * Weak dollar supports gold, high prices stem ETF flows
                                
 * Gold gains more than 2 pct this week on weak dollar
                                
 * SPDR gold ETF holdings <XAUEXT-NYS-TT> flat in past week
                                
 By Chikako Mogi
                                
 TOKYO, May 22 (Reuters) - Gold edged down on Friday on
profit-taking after a rally this week, but hovered near a
two-month high, supported by safe-haven demand as the dollar
remained weak and U.S. data on jobless claims and business
conditions dented hopes for a quick return to growth.
                                
 Gold has risen about 2.3 percent this week, and traders
said its upside was becoming limited ahead of a three-day
weekend in the United States and as current prices prompt some
investors to take profits while others halt investment in
gold-backed exchange-traded funds.
                                
 Spot gold <XAU=> fell 0.2 percent to $951.75 per ounce at
0658 GMT from New York's notional close of $953.40.
                                
 The metal rose as high as $955.95 on Thursday, its highest
since March 23. In March, gold prices rose as high as $966.
                                
 U.S. gold futures for June delivery <GCM9> edged up 0.1
percent to $951.90 per ounce from $951.20 at their settlement
on the COMEX division of the New York Mercantile Exchange on
Thursday.
                                
 Speculators have been boosting their holdings of U.S. gold
futures, another reason the market may be getting a bit
stretched given that buying has been driven by external factors
such as currencies and stocks, said a senior dealer at a
Japanese trading house.
                                
 "The market is now at a level where technicals will set its
direction, with traders watching if stop-loss orders above the
highs for March will be hit," the dealer said, saying
trend-following commodity trading advisers (CTAs) have been
placing such orders at various levels.
                                
 The dealer said that  while market players may wait to take
action until the June gold futures contract rolls over next
month, the dollar's further slide or sharp stock losses could
hit technical triggers.
                                
 Gold's relative strength index (RSI), a measure of whether
the metal is overbought or oversold, stood at 76 at Thursday's
close. The market views an RSI of 30 or less as oversold and 70
or more as overbought.
                                
 The Obama administration has no plans to push General
Motors <GM.N> into bankruptcy next week and the outcome of the
automaker's restructuring efforts may not be known until a June
1 deadline, a source familiar with the situation said on
Friday. [ID:nN21325204]
                                
 Traders said the U.S. automakers' bankruptcy, a factor
which would normally spur more safe-haven buying of gold, was
likely to have been factored in by market participants and
could even trigger profit taking given gold's current high
price.
                                
 They also said gold had been weighed down by selling from
India, the world's largest gold consumer, and Vietnam, when
prices jumped.
                                
 But data on Thursday suggesting that the U.S. economic
recovery, when it arrives, will be a long slog, with a key
factory index showing only marginally less weakness and
unemployment tipped to hit double-digit levels, helped support
gold.
                                
 Stock markets were also hit by suggestions that the United
States could lose its coveted triple-A credit rating.
[ID:nN21256165]
                                
 Also buoying bullion was the greenback, which fell to its
weakest in almost five months against a basket of currencies as
concerns about growing U.S. government debt prompted investors
to sell dollar assets from stocks to bonds. [USD/]
                                
 Cash flowing into the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, has paused
since rising on May 13 for the first time since it  began
declining after hitting a record high on April 9. Its holdings
were unchanged at 1,105.62 tonnes on May 21. [GOL/SPDR]
 Precious metal prices at 0707 GMT
 Metal             Last    Change  Pct chg  YTD pct chg
Turnover
 Spot Gold         951.40   -2.00   -0.21     14.25
 Spot Silver        14.42   -0.09   -0.62     -2.37
 Spot Platinum    1146.00   -2.50   -0.22    -24.61
 Spot Palladium    229.50   -1.50   -0.65    -37.64
 TOCOM Gold       2892.00    8.00   +0.28     -5.49      
23196
 TOCOM Platinum   3498.00  -43.00   -1.21    -34.48       
8958
 TOCOM Silver      435.60    0.10   +0.02    -19.48        
249
 TOCOM Palladium   708.00  -16.00   -2.21    -47.59        
232
 Euro/Dollar       1.3943
 Dollar/Yen         94.16
 TOCOM prices in yen per gram, except TOCOM silver which is
 priced in yen per 10 grams. Spot prices in $ per ounce.
 (Additional reporting by Risa Maeda; Editing by Clarence
Fernandez)