* U.S. headline inflation flat as expected; core CPI rises
* Gold market ignores China Gold Association comments
* Holdings by SPDR gold ETF <XAUEXT-NYS-TT> steady
(Recasts, updates with market activity, closing prices, adds
NEW YORK to dateline)
By Frank Tang and Rebekah Curtis
NEW YORK/LONDON, May 15 (Reuters) - Gold climbed to its
highest level in six weeks on Friday after data showed U.S.
core inflation in April rose more than expected, which boosted
the precious metal's appeal as a hedge against rising prices.
Spot gold <XAU=> rallied to $933.65 an ounce, its highest
price since March 27. It was at $930.70 an ounce at 3:45 p.m.
EDT (1945 GMT), up 0.6 percent from its late Thursday quote of
$925.35 in New York on Thursday.
U.S. gold futures for June delivery <GCM9> settled up $2.90
at $931.30 an ounce on the COMEX division of the New York
Mercantile Exchange.
U.S. core consumer prices rose faster than expected, up
0.3 percent in April from March. However, when food and energy
are included, headline inflation was unchanged for the period.
[]
"We've seen gold edging higher over the past week or so and
quite a bit of that is inflation related," James Moore, an
analyst at TheBullionDesk.com, said.
"Given the scale of quantitative easing that we have seen,
the potential implications for inflation are quite large,"
Moore said.
The bullion market largely ignored news that China should
boost its gold holdings to 3 percent of its total foreign
exchange reserves within five years, compared with 1.6 percent
now, a story sourced to the chairman of the China Gold
Association. []
In late April, China revealed that it had secretly raised
its gold reserves by three-quarters since 2003, increasing its
holdings to 1,054 tonnes and confirming years of speculation it
had been buying.
Gold is also deriving support from fears over the health of
the global economy after a spate of disappointing economic
data.
German gross domestic product (GDP) contracted by a much
larger than expected 3.8 percent in the first three months of
2009, tightening nerves after poor U.S. April retail sales
reported earlier this week. []
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings were unchanged at 1,105.62
tonnes on Thursday.
Gold may stay range-bound between $900 and $930 for a while
because of a loss of momentum for the metal and as investors
eye movements in the equities and oil markets, some analysts
said.
PLATINUM WEEK IN FOCUS
Platinum <XPT=> was at $1,099.00 an ounce, down 1 percent
from its late Thursday quote of $1,109.50.
The metal, used to clean exhaust fumes from vehicles, has
lost about 3.5 percent over the past week, despite
traditionally gaining ahead of the annual platinum week
gathering in London, which begins on Monday with the launch of
refiner Johnson Matthey's platinum report.
"Often, the run-up to Platinum Week sees prices of this
pricey metal move higher as investors anticipate good news from
the mix of data and commentary from Johnson Matthey. So the
recent weakness of platinum is all the more unusual," John
Reade, UBS head of metals strategy, said in a note.
"The sell-off appears to have been driven by investor
selling -- We have also heard talk of bank and fund selling of
OTC and futures positions in anticipation of GM's likely move
into Chapter 11 sometime in the next few weeks," Reade said.
General Motors Corp <GM.N>, facing possible bankruptcy, is
set to restructure its bond debt and reach a new sweeping deal
with its major union by June 1. []
Palladium <XPD=> was at $221.00 an ounce, down 1.1 percent
from its previous finish of $223.50.
Silver <XAG=> was at $13.99 an ounce, down 0.1 percent from
its previous finish of $14.00
(With additional reporting by Jan Harvey)
