PRECIOUS-Gold up on steady ETF flows, dip in dollar

* Speculators cut gold, silver longs
    * SPDR Gold holdings rise 0.4 pct on Friday
    * Platinum turns up after tapping 7-1/2-mth low

 (Updates prices; adds comment, second byline, NEW YORK
    By Marcy Nicholson and Eric Onstad
    NEW YORK/LONDON, Oct 17 (Reuters) - The price of gold rose
on Monday, partly lifted by steady flows into exchange-traded
funds (ETFs) and a dip in the dollar after touching seven-month
    Spot gold was up 0.4 percent at $1,255.60 an ounce by
2:30 p.m. EDT (1830 GMT), having fallen nearly 0.6 percent on
Friday to a one-week low of $1,247.01.
    U.S. gold futures settled up 0.1 percent at $1,256.6
per ounce. 
    "Supporting the price are moderate but continuous ETF
inflows since the beginning of the month. The rise so far this
month is more than for all of last month," said Commerzbank
analyst Daniel Briesemann in Frankfurt.
    Holdings of the largest gold-backed ETF, New York's SPDR
Gold Trust, rose 0.40 percent on Friday from Thursday.
    Total ETF gold holdings have gained 679,335 ounces so far
this month to 57.35 million ounces, according to Reuters data
    Spot gold, which has shed about 7 percent over the past
three weeks, is expected to stabilize after many speculators
ditched long positions, Briesemann added.
    Also supporting the price was a retreat in the dollar index
 from a seven-month peak touched earlier as investors
evaluated whether the Federal Reserve will let inflation run
above target before raising interest rates.
    "It's mainly dollar weakness that's putting a little bit of
a bid under the market," said Phillips Streible, senior
commodities broker for RJO Futures in Chicago.
    Major stock markets around the world fell, and U.S. and
European bond yields slipped off four-month highs amid
uncertainty over the health of the global economy. 
    Federal Reserve Vice Chair Stanley Fischer said on Monday
the U.S. economy may face longer and deeper recessions in the
future if interest rates remain stuck at current low levels,
mapping out a world in which low growth hamstrings central banks
from effective recession-fighting. 
    Among other precious metals, spot platinum was up
0.19 percent at $934 an ounce, after dropping to a 7-1/2-month
low at $923. 
    Investec analyst Hunter Hillcoat said in a note that
platinum prices should rise in the short-term along with gold
due to a flight to safety.
    "The fundamentals of both platinum and palladium markets
are, however, not indicating a rapid or strong enough recovery
in price during our medium-term forecast period, especially
while off-market stocks can be mobilised to cover the modest
market deficits we expect," he said.
    Silver added 0.35 percent to $17.44, while palladium
 dropped 1 percent to $637, after hitting a near
three-month low of $629.22 in the previous session.

 (Additional reporting by Nallur Sethuraman and Apeksha Nair in
Bengaluru; Editing by Bernadette Baum)