* Gold targets $1,516.40 -technicals [ID:nL4E7GK04A]
* Coming Up: U.S. ECRI Index Weekly; 1430 GMT (Updates prices)
By Lewa Pardomuan
SINGAPORE, May 20 (Reuters) - Gold bounced on Friday as bargain hunters resurfaced after prices slipped in the previous session, while silver could be struggling to sustain early gains following a drop in exchange-traded fund holdings.
Bullion has fallen about 5 percent since rallying to a lifetime high around $1,575 an ounce in early May, but expectations the U.S. Federal Reserve will keep monetary policy ultra-loose for a while longer following the release of weak economic data could polish up gold's safe haven appeal.
Spot gold added $5.76 an ounce to $1,497.36 by 0603 GMT. Silver barely moved, standing at 35.19 an ounce -- well below a record at $49.51 an ounce in April.
"The long-term uptrend for gold is still intact. If gold moves above the resistance of $1,500, then I think it could go higher. As the commodity markets start to stabilise, investment demand for silver could return. It has a strong positive correlation to gold and is a cheaper alternative," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
"I think, short-term, silver is still bearish."
Holdings in the world's largest silver-backed exchange-traded fund, iShares Silver Trust , fell to 10,203.73 tonnes by May 19, from 10,446.43 tonnes on May 18. [ID:nL4E7GK03B]
The dollar looked set to post its first weekly loss in three weeks as investors increased bets on risky assets like equities on expectations the United States would take a long time to raise interest rates after posting weak economic data.
Data showing a slowdown in manufacturing growth in the U.S. Mid-Atlantic region and an unexpected dip in existing home sales in April cemented views that if economic data continues to disappoint it could push out Fed action until well into 2012 or perhaps even later. [ID:nN19134058]
In the physical market, dealers noted buying from speculators and jewellers, although the volume had declined somewhat. Premiums for gold bars were steady at 80 cents to spot London prices in Singapore, but there were also offers at $1 an ounce.
"In all, it says buckle your seat and we will be in for a roller coaster ride, either up or down. Silver has come to a standstill. That's a pity, but allows time for us to focus on gold," said a physical dealer in Singapore.
"I heard there's not much movement in Hong Kong and there isn't gold scrap flowing through there. Basically, the Hong Kong supplies are one-way traffic into China and there's limited selling out."
U.S. gold futures for June delivery rose $4.9 an ounce to $1,497.3 an ounce.
Investors forsook gold exchange traded funds in the first quarter in favour of coins and bars, the World Gold Council said, with buying of physical investment products helping lift overall bullion demand by 11 percent. [ID:nLDE74H1FE]
Precious metals prices 0603 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 1497.36 5.76 +0.39 5.49 Spot Silver 35.19 0.24 +0.69 14.03 Spot Platinum 1765.99 3.49 +0.20 -0.09 Spot Palladium 723.75 -0.25 -0.03 -9.47 TOCOM Gold 3945.00 13.00 +0.33 5.79 37918 TOCOM Platinum 4702.00 -11.00 -0.23 0.13 10583 TOCOM Silver 92.40 0.50 +0.54 14.07 1198 TOCOM Palladium 1918.00 -9.00 -0.47 -8.54 302 Euro/Dollar 1.4322 Dollar/Yen 81.73 TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Reporting by Lewa Pardomuan; Editing by Clarence Fernandez)
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