* Weak dollar supports bullion in quiet pre-Easter trade
* Platinum, palladium hit multi-month highs
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, April 9 (Reuters) - Gold edged higher in Europe on
Thursday as the dollar weakened a touch versus the euro, but
trading was muted ahead of the Easter break.
Platinum and palladium both rose to multi-month highs,
however, as investment demand was boosted by talk of new
exchange-traded funds backed by the platinum group metals.
Spot gold <XAU=> rose to $882.85/883.85 an ounce at 0935 GMT
from $879.55 late in New York on Wednesday. Platinum <XPT=> rose
to a 6-1/2 month high of $1,210 an ounce, and was later at
$1,199.50/1,209.50 against $1,174.50.
Palladium touched a peak of $234.50 an ounce, its highest
since late September, and was later at $232.50/237.50 an ounce
against $230.50.
"I don't think we will see a great deal of action on gold,"
said Commerzbank analyst Eugen Weinberg. "The market was driven
by fear, so if there is not so much fear in the market investors
will not be looking for as much gold."
The metal is being supported, however, by a slightly softer
dollar, which is boosting the metal's appeal as an alternative
to the U.S. currency. []
Platinum and palladium are benefiting from strong investment
flows, as buyers hope demand will rise in the second half of the
year, he said.
"Demand for new cars at the moment is not increasing, but
that means there is greater potential for increases going
forward," Weinberg said. "There is anticipation of greater
demand in the second half of the year."
Investors are also seeking out the metal for the same
reasons they are attracted to gold, he added. "Platinum is a
hard asset, and given the possible inflation risks in the
future, people are interested in diversifying into assets like
that."
TRUSTS
The platinum group metals have been boosted this week by
news that ETF Securities has filed with the Securities &
Exchange Commission to register platinum and palladium trusts in
the United States. []
"It is clear that many market participants have positioned
themselves ahead of a potential platinum ETF product," said one
London-based analyst.
"Platinum (and palladium) is currently on the receiving end
of the most enthusiastic investor reception that it has seen for
many months, and participants are happy to operate in defiance
of the recent pressure that gold has succumbed to."
Any platinum-backed ETF is likely to face opposition in the
United States from carmakers, analysts say, who may object to
the industrial metal being stockpiled by investors.
However, given the current problems in the U.S. auto sector,
any such fund is likely to face less opposition than it would
have previously, they add. Carmakers are the biggest industrial
users of platinum, which is used in catalytic converters.
Holdings of the world's largest gold-backed ETF, New York's
SPDR Gold Trust <GLD>, were unchanged on Wednesday for the
fourth straight session, raising fears investor demand for the
precious metal may be stagnating. []
Jewellery buyers in India, the largest gold market, are also
staying away as they anticipate lower prices. []
On the supply side, South Africa, the world's number three
gold producer, said its output of the precious metal was up 2.7
percent in February from a year before. []
Among other precious metals, spot silver <XAG=> was little
changed at $12.27/12.34 an ounce from $12.25.
(Editing by Sue Thomas)
