* Gold steady but off highs; consumers buy
* Inverse link with dollar revived
* Coming Up: BoE rate decision at 1100 GMT; ECB rate
decision 1145 GMT; US weekly jobless claims at 1230 GMT
(Updates throughout with comments, prices; changes dateline
and byline)
By Amanda Cooper
LONDON, Aug 5 (Reuters) - Gold edged higher in Europe on
Thursday, heading for its seventh successive daily gain, as fund
buying and consumer demand in Asia helped offset the impact of a
recovery in the dollar and a decline in ETF holdings.
Gold has rallied by nearly 1.5 percent so far this week, its
best weekly performance since late June, as renewed concern
about the outlook for the U.S. economy, a resurgence in consumer
buying and the reestablisment of the traditional inverse
relation to the dollar have combined to support the market.
Spot gold <XAU=> was last bid at $1,198.00 an ounce at 0955
GMT in London, compared with $1,194.60 late in New York on
Wednesday, having hit two-week highs at $1,202.90 the day
before. December COMEX futures <GCZ0> were last at $1,198 an
ounce, showing a $2.80 gain on the day.
Much of gold's safe haven appeal for investors that derived
from the euro zone debt crisis and pushed prices to record highs
in late June has evaporated.
But James Moore, an analyst with thebulliondesk.com said
renewed confidence in the global economy, helped by upbeat
corporate earnings, has lifted the broader commodity complex as
well as gold itself by association.
"While we have seen a bit of improvement in the European
debt situation, I think investors are still very cautious and
obviously, more and more people are looking to diversify their
portfolios. So, even if they only add a fraction of gold, those
numbers add up," Moore said.
DOLLAR LINK
As nervousness over the euro zone has abated, concern about
the robustness of some U.S. economic data has resurfaced,
knocking the dollar against the euro <EUR=> and resurrecting
gold's habitual inverse link to the U.S. currency.
On Thursday, the dollar recovered some poise ahead of weekly
employment data after some signs that job creation was healthier
than expected. []
On a rolling one-month basis, the correlation between gold
and the dollar index <.DXY> turned negative for the first time
since late May, UBS analyst Edel Tully noted in a report.
Also, there has been intense speculation in the fixed income
markets that the Federal Reserve will embark on a fresh
bond-buying programme to ensure interest rates remain at their
current low levels for some time, an environment that would be
beneficial to gold, which does not offer any yield.
"It's still a very tricky market to call on the near term. I
suppose the positive sign for gold now is that it has held up
some pretty heavy selling pressure towards $1,150," said Mark
Pervan, senior commodities analyst at ANZ in Melbourne.
"If we start to see the relationship being re-established
for the negative correlation with the U.S. dollar, then there's
a potential for gold prices to move back up into the $1,200 to
$1,250 range pretty quickly."
Nick Holland, the chief executive of Gold Fields <GFIJ.J>,
the world's fourth-largest gold miner, told Reuters Insider that
gold's fundamentals suggested further price gains were possible,
even though his company missed expectations with its
fourth-quarter results.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Click on this link for the Insider interview with Gold
Fields:
http://link.reuters.com/byz43n and on this link for an interview
with Randgold click on: http://link.reuters.com/pyz43n
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Firmer European equity prices and caution ahead of interest
rate decisions from both the Bank of England and the European
Central Bank later in the day restricted gains for gold, along
with a decline in holdings of gold at the world's largest
exchange-traded fund, SPDR Gold Trust. []
In other precious metals, silver <XAG=> was up about 0.4
percent on the day, holding at $18.33, compared with $18.25 in
New York on Wednesday, shrugging off a decline in silver
holdings in the iShares Silver Trust <SLV>.
Platinum group metals were down on the day. Platinum <XPT=>
was last at $1,571.35 an ounce, versus $1,577.00, while
palladium <XPD=> was at $493.00, versus $494.00.
(Additional reporting by Lewa Pardomuan in Singapore; Editing
by Alison Birrane)
