* Dollar index up slightly but weaker against euro
* SPDR gold ETF holdings declines; Indian demand down
* ETF Securities London palladium ETC holdings hit record
(Recasts, updates comment, closing prices, market activity,
adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Oct 22 (Reuters) - Gold prices turned
higher on Thursday, reversing early losses as the dollar
continued to lose ground against the euro, increasing interest
in the metal as an alternative to the U.S. currency.
The metal continued to take heart from the expected
long-term weakness of the dollar. Investors were turning to
gold as the depreciation of global currencies threatened the
value of paper assets.
"I don't think we necessarily need to see a lot lower
dollar to see the gold price rally. We could have a gold price
rally in other currencies more than the dollar," said Caesar
Bryan, portfolio manager at the $580 million GAMCO Gold Fund in
New York.
Spot gold <XAU=> was at $1,059.15 an ounce at 3:21 p.m. EDT
(1921 GMT), against $1,058.35 late in New York on Wednesday.
U.S. December gold futures <GCZ9> settled down $5.90 at
$1,058.60 an ounce on the COMEX division of the New York
Mercantile Exchange.
A decline in the equity markets in early trade dented
appetite for risk, benefiting the dollar at the expense of
higher-yielding currencies. U.S. stocks, however, turned higher
in late sessions, as the Dow rose 1.5 percent.
Pradeep Unni, a senior analyst at Richcomm Global Services,
said dollar weakness was still likely to hold the metal in a
range between $1,044 and $1,071, but added that consolidation
may be necessary before another push higher.
For a graphic showing the gold price in various currencies,
click here:
http://graphics.thomsonreuters.com/109/CMD_GLDCUR1009.gif
In New York late sessions, the dollar turned weaker versus
the euro <EUR=> as Wall Street rallied amid returning risk
appetite.
SLACK DEMAND
Demand for physical gold remained slow, with jewelry buying
tailing off in major consumer India after last week's festival
period and as a decline in the rupee made dollar-priced assets
more expensive. []
The world's largest gold exchange-traded fund, the SPDR
Gold Trust <GLD>, also reported an outflow on Wednesday. Its
holdings fell nearly 40,000 ounces or 0.1 percent.
Demand from gold investment products and exchange-traded
funds grew in the third quarter despite weak jewelry demand, a
report by World Gold Council showed.
Total volume of gold bullion bought via ETFs rose by 38.5
tonnes to a record 1,732.5 tonnes for the quarter, the
industry-sponsored WGC said in an October report.
[]
Among other precious metals, silver <XAG=> was at $17.58 an
ounce against $17.66 late on Wednesday, tracking losses in
gold. Platinum <XPT=> was at $1,364 an ounce against $1,359.
Palladium <XPD=> was at $335, up from its previous session
late quote at $332.50, supported by fears over the outlook for
Russian and South African supply and hopes for a recovery in
automotive demand.
Platinum and palladium are mainly used in autocatalysts.
Investment demand is also strong. ETF Securities said
holdings of its London palladium exchange-traded commodity rose
nearly 9,000 ounces on Wednesday to record highs.
[]
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCZ9> 1064.50 5.9 0.6 884.3 20.4
US silver <SIZ9> 17.825 0.267 1.5 11.295 57.8
US platinum <PLF0> 1374.40 18.10 1.3 941.50 46.0
US palladium <PAZ9> 341.50 3.85 1.1 188.70 81.0
Prices at 2:52 p.m. EDT (1852 GMT)
Gold <XAU=> 1061.75 7.75 0.7 878.20 20.9
Silver <XAG=> 17.66 0.21 1.2 11.30 56.3
Platinum <XPT=> 1364.00 17.00 1.3 924.50 47.5
Palladium <XPD=> 337.00 3.000 0.9 184.50 82.7
Gold Fix <XAUFIX=> 1053.75 0.25 0.0 836.50 26.0
Silver Fix <XAGFIX=> 17.39 -36.50 -2.1 14.76 17.8
Platinum Fix <XPTFIX=> 1346.00 9.00 0.7 1529 -12.0
Palladium Fix<XPDFIX=> 334.00 2.00 0.6 365.0 -8.5
(Additional reporting by Julie Crust in London; Editing by
Lisa Shumaker)
