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GOLD-barsLONDON: Gold rose on Tuesday as the dollar eased from a seven-week high against the euro, relieving downward pressure on prices, while lingering concerns over euro zone debt supported demand for the metal as a haven from risk.

Spot gold was bid at $1,492.29 an ounce at 1206 GMT, against $1,489.20 late in New York on Monday. US gold futures for June delivery rose $1.30 an ounce to $1,491.90.

The dollar eased 0.2 percent against the euro on Tuesday, although lingering concerns over the euro zone periphery kept traders cautious towards the single currency.

Gold is sensitive to movements in the dollar, as strength in the US unit curbs the metal's appeal as an alternative asset, and also makes dollar-priced commodities more expensive for holders of other currencies.

"Gold is very, very rangebound, following the euro/dollar," said Standard Bank analyst Walter de Wet.

"We have been seeing consistent physical buying in Asia in general, and very little scrap coming to the market. That physical buying is supporting gold to some extent."

The metal's rally to record highs above $1,575 an ounce earlier this month was helped by dollar weakness. However, it has since retreated as the US currency bounced from lows.

The metal has also come under pressure from signs investor confidence in its ability to rise significantly further may have waned as prices rose to previously unseen highs this year.

Filings with the US financial regulator showed on Monday that billionaire financier George Soros dumped almost his entire $800 million stake in bullion in the first quarter. Famed gold bull John Paulson held his ground, but Soros was joined in the retreat by several other big names.


Gold holdings in exchange-traded funds monitored by Reuters fell for a tenth consecutive trading day on Monday, bringing the net decline over this period to over 1.14 million ounces. They are down 1.62 percent year to date.

In the last month in gold, the only outflows have come from the largest fund, the SPDR Gold Trust, which reported a 1.25-million ounce outflow from mid-April to May 16.

The ZKB Physical Gold fund saw the largest absolute rise in its holdings in that period, up 77,400 ounces, while the iShares Gold Trust was up around 74,400 ounces.

"It is worth noting... that SPDR seems to be falling out of favour with investors (maybe because it is more visible than other ETFs), and that other ETFs have been taking up the slack," said Standard Chartered analyst Daniel Smith.

"SPDR was down 5 percent in the first quarter while the total physical holding for all major gold ETFs was down by just 3 percent. So far in Q2, SPDR is down 1.6 percent, while the total physical holding for all major ETFs was up by 0.6 percent."

Holdings of the world's largest silver-backed exchange-traded fund, New York's iShares Silver Trust, fell another 51 tonnes on Monday. The fund has seen outflows of 570 tonnes since its correction from record highs began in earnest in late April.

Investors are likely to be wary of silver after the metal plummeted in early May after climbing sharply earlier in the year, analysts said.

Silver was bid at $33.94 an ounce against $33.56. Among other precious metals, platinum was at $1,765.99 an ounce against $1,751.20, while palladium was at $714.22 against $707.83.

Platinum Week in London entered its second day, after the launch of refiner Johnson Matthey's keenly awaited report on the platinum group metals' market fundamentals on Monday.

"Overall JM were positive in their 2011 crystal ball gazing, but this also came with a dose of cautiousness," said UBS in a note. "They estimate that the 2010 status quo - of a sizeable deficit for palladium and a platinum market close to balanced - will be retained."

Copyright Reuters, 2011


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