* Dollar holds gains versus euro after Friday's rally
* Oil, equities decline as caution sets in
* ETFS Physical Palladium holdings up 2.7 percent to record
(Updates prices)
By Jan Harvey
LONDON, Aug 10 (Reuters) - Gold prices held near $955 an
ounce in Europe on Monday as the dollar steadied against the
euro after the previous session's rally, with scant demand for
physical bullion limiting fresh price gains.
Spot gold <XAU=> was bid at $953.20 an ounce at 1123 GMT,
against $953.80 an ounce late in New York on Friday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange fell $3.50 to $956 an ounce.
The precious metal eased on Friday as the dollar firmed
against the euro in the wake of better-than-expected U.S. jobs
data for July.
"Gold is not reacting to commodity-specific or gold-specific
news, but rather is being driven by macroeconomic (factors),"
said Commerzbank analyst Eugen Weinberg. "The most important of
these is the euro/dollar."
The dollar was little changed against the euro, holding onto
last week's gains. Gold tends to move in the opposite direction
to the U.S. currency as a soft dollar makes gold cheaper for
holders of other currencies. []
European stocks edged down meanwhile, despite a strong
session in Asia, as banking shares and commodity stocks led the
main index lower after four weeks of gains. []
Investors are reluctant to add significant risk to
portfolios after Friday's broad rally sparked by the July U.S.
jobs report, which was seen as a clear indication the economy is
turning around from a deep recession. []
Oil prices edged down as equity market weakness tempered
optimism over the prospects for economic recovery. Rising crude
prices can boost interest in bullion as a hedge against oil-led
inflation. []
SOFT DEMAND
Physical demand for gold remained soft, meanwhile, with the
world's largest bullion-backed exchange-traded fund, the SPDR
Gold Trust <GLD>, reporting a 3.97-tonne outflow on Friday.
The fund's gold holdings have declined more than 40 tonnes
in the last four weeks. []
"With physical demand very low and ETF investors carrying
out further pockets of redemptions, (gold) is reliant on further
fund/speculative buying to fuel rallies," said James Moore, an
analyst at TheBullionDesk.com.
The metal is also taking support from the signing of a new
Central Bank Gold Agreement to limit official sector gold sales.
While a third pact was expected, the cut in the sales ceiling to
400 tonnes from 500 is lending support to prices, analysts said.
Among other precious metals, silver <XAG=> was at $14.45 an
ounce against $14.59, tracking gold. Platinum <XPT=> was at
$1,243.50 an ounce against $1,261.50, while palladium <XPD=> was
at $272 an ounce from $273.
South Africa's biggest union said on Saturday it was
considering a wage offer from state power firm Eskom after talks
last week to avert a strike that could cripple the republic.
[]
South Africa is the world's biggest platinum miner,
producing around four-fifths of global supply of the metal, and
the second largest producer of palladium after Russia.
Palladium took support from news that ETF Securities' ETFS
Physical Palladium fund, which is backed by physical stocks of
the metal, added more than 9,000 ounces to its holdings,
bringing them to a record 351,440 ounces. []
(Reporting by Jan Harvey; Editing by Keiron Henderson)
