* Gold rises 2 percent, platinum up 5 percent in Asian trade
* Dollar steadies after earlier weakness
* Oil prices tick up on storm fears in Gulf of Mexico
(Recasts, updates throughout, changes dateline, pvs TOKYO)
By Jan Harvey
LONDON, Aug 18 (Reuters) - Gold prices were firmer in Europe
on Monday, but retreated from highs hit in Asian trade as the
dollar steadied against the euro.
The yellow metal climbed more than 2 percent to above $800
an ounce in early trade as the dollar slipped and oil prices
rose, triggering a wave of short covering.
But the metal failed to hold on to those gains as the dollar
steadied amid expectations it could be due another leg higher.
"Most of the gold price movement is strongly correlated with
what is happening in the U.S. dollar," said Lehman Brothers
analyst Michael Widmer.
"One thing that is keeping gold prices under pressure is the
view that the dollar is going to be (stronger) going forward."
Gold typically moves in the opposite direction to the U.S.
currency, as it is often bought as a hedge against dollar
weakness.
At 1013 GMT, spot gold <XAU=> was trading at
$796.95/797.95 an ounce, up from $787.65/789.25 late
on Friday in New York, but off its earlier session high of
$803.65.
Gold slipped around $70 an ounce, or 8 percent, last week as
a broad strengthening in the dollar led investors to sell
commodities.
A wave of short-covering inspired by the weaker dollar and
some bargain hunting pushed prices higher early on Monday. The
dollar retreated from a six-month high against the euro as a
recovery in oil and commodity prices arrested its recovery.
[]
However, gold remains susceptible to further downward moves
if the dollar resumes its upward trend.
"We are going to see a further retracement in the gold
market, in particular on dollar strength," said Saxo Bank
analyst Philip Carlsson.
"Even though the dollar has already (made) quite a large
movement, people are predicting dollar strength will be the
subject going forward."
An uptick in oil prices on Monday is also supporting prices.
Oil rose more than $1 to above $115 a barrel as investors
worried Tropical Storm Fay would disrupt supply in the Gulf of
Mexico. []
PLATINUM ETF HOLDINGS SLIP
Platinum firmed more than 5 percent in Asian trade, but has
since slipped back to trade little changed from its level in New
York late Friday.
The market remains under pressure from fears over demand
from carmakers, which consume over half of the world's platinum
every year.
London-based ETF Securities said holdings of its Physical
Platinum <PHPT.L> exchange-traded commodity, which issues
securities backed by physical metal, fell 30 percent in the week
to Sunday, to their lowest level since February.
Its Physical Palladium <PHPT.L> ETC also saw an outflow of
10 percent, or just over 25,000 ounces. []
Platinum <XPT=> was trading at $1,377.00/1,397.00 an ounce,
up slightly from $1,365.00/1,385.00 in New York. Earlier it
reached a session high of $1,438.00.
Meanwhile, spot palladium was trading at $283.50/291.50
against $281.00/289.00.
Among other precious metals, spot silver was at $13.11/13.16
an ounce against $12.74/12.84. Earlier it climbed almost 5
percent to a session high of $13.32 an ounce.
(Reporting by Jan Harvey; editing by Christopher Johnson)
