PRECIOUS-Gold drops on profit-taking but outlook positive

                                
 * Preweekend profit taking after previous session gains
                                
 * Inflation concerns, economic optimism should support
                                
 * ETFS Silver in excess of $1 billion over next 6-12 mth
                                
 (Updates with quotes, closing prices, adds NEW YORK to
dateline)
                                
 By Frank Tang and Jan Harvey
                                
 NEW YORK/LONDON, July 24 (Reuters) - Gold futures ended
slightly lower but held above $950 an ounce on Friday as
investors took profits, but inflation concerns amid economic
optimism should continue to stir investment demand.
                                
 Even though the price of gold did not rally further this
week, bullion should be well supported at current levels
because of dollar weakness and risk-aversion demand amid
lingering uncertainty for the financial markets, analysts
said.
                                
 "We are still up here in quite a high range. We don't see
any physical buying coming in at these levels, but what is
supporting it is the dollar," said Andrey Kryuchenkov, an
analyst at VTB Capital.
                                
 "The dollar's weakness and the idea that inflation
expectations are on the rise are holding gold here,"
Kryuchenkov said.
                                
 U.S. August futures <GCQ9> settled down $1.70 at $953.10 an
ounce on the COMEX division of the New York Mercantile
Exchange.
                                
 Spot gold <XAU=> traded at $951.05 at 2:51 p.m. EDT (1851
GMT) against $947.15 in its previous session finish.
                                
 The dollar weakened against the euro on Friday after a
stronger-than-expected estimate of the German Purchasing
Managers' index and improved surveys on the euro zone services
and manufacturing sectors boosted the single currency. [FRX/]
                                
 Bullion investors also locked in profits ahead of the
weekend. On Thursday, spot bullion rose as Wall Street rallied
over 2 percent and the Dow Jones industrial average closed over
9,000 for the first time since January.
                                
 BUYERS AT BAY
                                
 A rise in Indian gold prices above 15,000 rupees per 10
grams is keeping buying there at bay. "Traders feel
uncomfortable to bid gold at 15,000 rupees," a Mumbai-based
dealer said. [ID:nBOM502694]
                                
 A Reuters poll released Friday showed Indian gold prices
were expected to ease by end-September as the rupee was likely
to strengthen and domestic demand may be subdued.
[ID:nBOM432392]
                                
 Last year India was the biggest gold jewelry consumer in
the world, accounting for nearly 475 tonnes of sales, according
to metals consultancy GFMS.
                                
 Investment demand was lackluster, with holdings of the
world's largest gold exchange-traded fund, the SPDR Gold Trust
<GLD>, stable on Thursday after two days of outflows.
[GOL/SPDR]
                                
 Analysts who study historical chart patterns to determine
future price moves say the precious metal is also facing tough
technical resistance below $960 an ounce.
                                
 On the supply side, the Russian Gold Industrialists' Union
said the country's production rose nearly 25 percent in the
first half of the year. [ID:nLO73206]
                                
 Among other precious metals, silver <XAG=> was at $13.85 an
ounce against $13.70, platinum <XPT=> was at $1,184 an ounce
against $1,174, and palladium <XPD=> at $257.50 from $255.50.
                                
 ETFS Silver Trust <SIVR.P> is expected to hold assets of
more than $1 billion over the next six to 12 months, said a
senior company official. [ID:nN24477095]
 (Reporting by Frank Tang and Jan Harvey; Editing by Marguerita
Choy)