* Gold taking cue from dollar weakness
* Liquidity insufficient due to caution before ECB, U.S. data
* SPDR Gold holdings steady at 1,115.884 tonnes
By Chikako Mogi
TOKYO, Jan 14 (Reuters) - Gold inched up on Thursday, keeping
a bullish tone from the day before when a weaker dollar spurred
short-covering and physical buying, but investors were trading
cautiously before the European Central Bank's policy decision and
U.S. data.
Gold prices fell sharply on Tuesday when China's decision to
raise bank reserve requirements sparked fears that spending would
be curtailed and decrease bullion's appeal as a hedge against
inflation.
As the dollar remained under pressure, players shifted their
immediate focus to the ECB's policy decision and remarks by ECB
President Jean-Claude Trichet, as well as U.S. retail sales and
weekly jobless claims due later in the day.
"People are cautiously bullish, but liquidity is not enough"
as they await the key events and see how the dollar moves, said
Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
The news from China provided an excuse to take profits
following the market's rally since the start of the year, he
said, adding that he expected prices to stay between $1,120 and
$1,150 for now.
Spot gold <XAU=> edged up 0.3 percent to $1,140.90 per ounce
as of 0632 GMT, compared to New York's notional close of
$1,137.60.
U.S. gold futures for February delivery <GCG0> were up 0.4
percent at $1,141.0 per ounce, compared to $1,136.80 an ounce on
the COMEX division of the New York Mercantile Exchange.
As the market steadied, investment outflows also halted.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,115.884 tonnes as
of Jan. 13, unchanged from the previous business day. The
holdings hit a record high of 1,134.03 tonnes on June 1.
[]
Traders said gold could test new highs in the coming months
if the dollar remained on a weak trend.
Gold prices will likely eclipse last year's record levels in
the first half of the year, as stronger investment demand offsets
the impact of relatively weak jewellery fabrication and lower
de-hedging activity, a closely watched report said on Wednesday.
Gold could average $1,175 an ounce in the first half of 2010,
up from last year's average of $972, said London-based
consultancy GFMS in an update of its Gold Survey 2009 report.
[]
Precious metals prices at 0631 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1140.85 3.25 +0.29 4.12
Spot Silver 18.63 0.04 +0.22 10.70
Spot Platinum 1580.00 6.00 +0.38 7.70
Spot Palladium 420.50 -1.00 -0.24 3.70
TOCOM Gold 3375.00 53.00 +1.60 3.56 64131
TOCOM Platinum 4641.00 42.00 +0.91 5.93 19407
TOCOM Silver 55.50 1.60 +2.97 7.35 515
TOCOM Palladium 1246.00 10.00 +0.81 6.95 400
Euro/Dollar 1.4532
Dollar/Yen 91.67
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Editing by Michael
Watson)
