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UPDATE 4-Gold steady as inflation fears balance dollar

 * Gold steady as inflation fears balance firmer dollar
 * Palladium slips 2.5 pct, platinum down on demand fears
 * Silver dips 1 pct on hopes Peru strike nearing end
 
 By Jan Harvey
 (Updates prices, recasts, adds detail)
 LONDON, July 4 (Reuters) - Gold was steady in Europe on
Friday as fears over rising inflation balanced the effects of a
strengthening dollar and slipping oil prices.
 Concerns over rising prices are firmly underpinning the
metal, and could take it to its third consecutive weekly gain.
The metal ended last Friday at $927.15 an ounce.
 Trading was light on Friday with New York closed for the
Independence Day holiday, potentially leading to increased
volatility in the market.
 Gold XAU= was little changed at $932.10/933.10 an ounce at
1437 GMT from $932.70/934.70 late in New York on Thursday.
 Traders see the market well supported above $930 an ounce,
as inflation fears driven by high oil prices boost the precious
metal's appeal as a hedge.
 "Indicators are still positive for gold -- high energy
prices (and) the ongoing inflation trend are definitely adding
support to gold," said Frederic Panizzutti, a trader at MKS
Finance.
 Gold slipped 1 percent in New York on Thursday as the dollar
rallied  against the euro, benefitting from a less hawkish than
expected outlook on interest rates from the European Central
Bank and firmer-than-forecast U.S. payroll data.
  A stronger dollar typically pressures gold, which is often
bought as an alternative investment to the U.S. currency. A
softer greenback makes dollar-priced gold cheaper for holders of
other currencies.
 The dollar ticked up a further 0.1 percent to hold near
one-week highs against the euro on Friday. [ID:nL04146426]
 Oil prices have also slipped after hitting new an all-time
high of $145.85 a barrel on Thursday as tensions between Iran
and Israel inspired traders to stock up on oil ahead of the
Independence Day holiday. [ID:nSIN37299]
 The July 4 weekend marks the peak of the U.S. summer driving
season, a period of strong demand for gasoline as Americans take
to the road for holidays. Gold is typically bought as a hedge
against oil-led inflation.
 "Speculative market activity saw crude oil prices hold
steady at record levels on medium to long-term supply fears," 
Manqoba Madinane, an analyst at Standard Bank, said in a note.
 "This should further anchor global inflation expectations,
and with equity markets remaining under pressure, precious
metals should remain an attractive haven for investment funds."
 Exchange-traded fund holdings of the precious metal have
increased as the dollar has weakened and inflation fears flared.
 New York's SPDR Gold Trust, the world's largest ETF backed
by physical gold, holds 658.38 tonnes of the precious metal,
down a touch from Thursday but close to its all-time record
above 663 tonnes.
 In India, the gold holdings of five ETFs rose 4 percent
month-on-month in June to 4.76 tonnes, the highest since the
funds were launched last year. 
 Fund managers attributed the rise to weak equities boosting
the appeal of commodities as an asset class.
 In industry news, the South African Department of Minerals
and Energy said Gold Fields GFIJ.J had suffered a quarter of
South Africa's mine deaths so far this year. [ID:nL03325692]
 Two workers died last week after an earth tremor at the
company's Kloof mine, leading Gold Fields to close production at
the pit, losing 70 kg of production.
 Among other precious metals, spot platinum XPT= slipped
half a percent to $2,004.00/2,024.00 an ounce from
$2,017.50/2,037.50 late in New York.
 Its sister metal palladium XPD= fell 2.5 percent to
$449.50/457.50 an ounce from $460.50/468.50 an ounce.
 Both metals have been pressured by fears a slowing U.S.
economy will affect demand for the metals from carmakers, who
use platinum and palladium in catalytic converters.
 "Platinum and palladium (are) affected additionally by
higher oil prices, as they will no doubt undermine car sales and
thus the demand for catalytic converters," said Commerzbank in a
note.
 Silver XAG= slipped 1 percent to $17.99/18.07 an ounce
from $18.21/18.31. Union support for a strike in Peru, the
largest producer of silver, appears to be slipping, dampening
fears the action could disrupt supply.
 (Reporting by Jan Harvey; Editing by David Evans)

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