* Dollar slips as investors eye riskier currencies
* Oil, base metals rise as weak dollar boosts hard assets
* iShares silver ETF at record
(Updates prices after gold hits 7-week high)
By Jan Harvey
LONDON, Aug 3 (Reuters) - Gold jumped to 7-week highs above
$960 an ounce on Monday, boosted by a weak dollar, but gains are
expected to be capped by a dearth of demand for physical stocks
of the metal from jewellers and exchange-traded funds.
Silver prices climbed to a five-week peak, however, as the
largest silver-backed ETF reported a 61-tonne rise in its
holdings of the metal to a new record high.
Spot gold <XAU=> hit $960.80 an ounce and was bid at $959.70
an ounce at 1158 GMT, against $953.90 an ounce late in New York
on Friday. Silver <XAG=> was at $14.30 an ounce against $13.89,
earlier it touched a high of $14.33, the highest since mid-June.
"Though dollar weakness and recovery in risk appetite could
push (gold) higher, its failure so far to break above a key
resistance point suggests prices have limited upside scope,"
said Pradeep Unni, senior analyst at Richcomm Global Services.
"Lacklustre investment demand and the low physical demand
are adding to the concerns that the summer rally may fail to
hold on to the gains," he added.
Holdings of the largest gold-backed ETF, New York's SPDR
Gold Trust <GLD>, were unchanged for a second straight session
on Friday, having fallen nearly 50 tonnes in July. []
London's ETF Securities said holdings of its three
gold-backed exchange traded commodities (ETCs) fell 1.2 percent
last week. ETFs, including ETCs, issue securities backed by
physical commodities, and their buying was a big source of gold
demand in the first quarter. []
Jewellery demand was also lacklustre as Indian consumption
weakened on the back of higher prices. "Traders are waiting for
lower prices," said one dealer. []
But weakness in the dollar, which is boosting demand for
hard assets such as bullion as well as making it cheaper for
holders of other currencies, firmly underpinned gold prices.
The dollar hit its lowest point this year against a basket
of currencies as higher oil prices, rising global stock markets
and positive economic data diverted investment into currencies
seen as higher risk. []
STOCKS CLIMB
World stocks climbed to a new 2009 high on Monday after
signs of a pick-up in Chinese economic activity lifted Asian
shares and with positive banking news emerging in Europe.
[] []
Rising equity markets and positive Chinese economic data
boosted interest in oil, with prices rising to a one-month high.
Stronger crude prices generally support interest in gold as a
hedge against oil-led inflation. []
Oil and the dollar also fuelled gains in silver prices, but
the metal took further support from fresh inflows into
silver-backed exchange-traded funds last week.
The largest silver ETF, the iShares Silver Trust, said its
holdings rose more than 60 tonnes to a record 8,828 tonnes on
Friday, while Switzerland's Zurich Cantonal Bank said its silver
holdings rose 1.929 million ounces last week. []
[]
"We expect silver to continue broadly tracking gold and the
dollar in the coming sessions, with scaled-up resistance
expected around $14.40/14.65," said TheBullionDesk.com analyst
James Moore.
Platinum <XPT=> was at $1,218 an ounce against $1,207.50,
while palladium <XPD=> was at $265 against $261.50. Platinum
group metals traders are awaiting U.S. car sales data due later
in the session for direction.
As both platinum and palladium are chiefly used in
autocatalysts, prices have suffered from a downturn in car
demand in the last year.
(Additional reporting by Catherine Bosley and Pratima Desai;
Editing by William Hardy)
