* Precious metals slip from highs as dollar steadies vs euro
* Oil up on fears Gulf of Mexico storm will affect supply
* ETF Securities' Physical Platinum ETC holdings drop 30 pct
(Adds comment, updates prices)
By Jan Harvey
LONDON, Aug 18 (Reuters) - Gold firmed in Europe on Monday
as oil prices rose, but slipped from highs hit in Asian trade as
the dollar recovered some lost ground against the euro.
At 1351 GMT, spot gold <XAU=> was trading at $797.30/798.50
an ounce, up from $787.65/789.25 late on Friday in New York but
off its earlier session high of $803.65.
The yellow metal climbed more than 2 percent to above $800
an ounce in Asia as the dollar slipped and oil climbed,
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.
Gold typically moves in the opposite direction to the U.S.
currency, as it is often bought as a hedge against dollar
weakness.
"We are seeing people jump from gold into the U.S. dollar
again," said Philip Carlsson, global product manager for futures
and options at Saxo Bank.
But analysts say higher crude prices are underpinning gold,
which is often bought as a hedge against oil-led inflation.
Oil climbed more than 1 percent to an intraday high above
$115 a barrel as investors worried Tropical Storm Fay could
disrupt operations in the Gulf of Mexico. []
A wave of short-covering inspired by the weaker dollar and
some bargain hunting after gold slipped $70 an ounce last week
pushed prices higher early on Monday.
FEWER NET LONG POSITIONS
But the precious metal is susceptible to further downward
moves if the dollar resumes its upward trend, analysts say.
According to data released on Friday by the U.S. Commodity
Futures Trading Commission, traders are tending to close out
long positions, or commitments to buy.
"In the week to Aug. 12, net long positions fell by over
30,000 contracts to 130,660, the lowest level since Sept 2007,"
Commerzbank analysts said in a note.
"The marked decline in gold prices in recent weeks is
reflected in optimism among speculative non-commercials fading."
Platinum also firmed more than 5 percent in Asian trade, but
has since slipped back to trade little changed. 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. []
"Long liquidation remains the game in the PGM space, and
rallies it seems will struggle to last while marooned ETF
investors in particular look for opportunities to bail," said JP
Morgan analyst Michael Jansen in a note.
Platinum <XPT=> was trading at $1,377.50/1,397.50 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 $278.00/286.00
against $281.00/289.00.
Among other precious metals, spot silver was up nearly 4
percent at $13.21/13.28 an ounce against $12.74/12.84.
(Reporting by Jan Harvey; editing by Christopher Johnson)
