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PRECIOUS-Gold steadies after earlier risk appetite as dollar drops

Published 20/01/2016, 07:02 am
© Reuters.  PRECIOUS-Gold steadies after earlier risk appetite as dollar drops
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* China Q4 GDP up 6.8 pct, slowest growth since 2009

* Spot gold recovered from session low of $1,082.55/oz

* Gold ETF inflow rises (Updates prices; adds comment, second byline, NEW YORK dateline)

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, Jan 19 (Reuters) - Gold steadied on Tuesday, as the dollar turned lower, U.S. crude oil prices fell below $29 per barrel and U.S. equity markets pared gains.

Gold prices were weak for most of the session after fourth-quarter data showed that China had its slowest economic growth since 2009, fanning stimulus hopes and spurring investors towards riskier assets. had a little more of a flight to risk and gold is reflecting that, but not in a big way," said Bill O'Neill, co-founder of commodities investment firm Logic Advisors in New Jersey.

"We have a less frenetic tone than we ended last week with."

Spot gold XAU= was up 0.05 percent at $1,089.15 an ounce at 2:47 p.m. EST (1947 GMT) after a lethargic session on Monday when U.S. markets were shut for the Martin Luther King Jr. holiday. U.S. gold for February delivery GCcv1 settled down 0.1 percent at $1,089.10.

Spot gold recovered after falling to a session low of $1,082.55.

"As long as there is confusion about how China manages exchange rate policy, how they will intervene in the stock market and so on, there will be some safe-haven demand for gold," Danske Bank senior analyst Jens Pedersen said, earlier in the session.

"However, even though we have seen a re-pricing of the Fed's rate hike this year (the market doesn't expect a full rate hike before December), we haven't seen much dollar weakness and that's because the market is expecting monetary easing from other central banks."

The dollar turned lower, by as much as 0.1 percent against a basket of major currencies .DXY , making gold slightly cheaper for foreign holders.

"Most people are in doubt that the worst is over for the metal, even if we have seen futures markets coming from record short at the beginning of the year back to neutral and we have seen a decent pick up in ETF's holdings in the past 10 days," Saxo Bank's Hansen said.

SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, said its holdings rose 0.59 percent to 657.92 tonnes on Friday. ETF/GOL

Weak physical demand from top gold consumers China and India has also limited gold's upside potential, analysts said, with Chinese consumer spending dented by its slowing economy.

Spot platinum XPT= climbed 1.1 percent to $827.75 an ounce after falling to a seven-year low of $812.95 in the previous session.

Palladium XPD= rose 0.4 percent to $493.18 and silver XAG= gained 1 percent to $14.06.

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