LONDON, June 11 - Gold held steady in Europe on Thursday, supported by a weaker dollar and strong oil prices, but the market was restrained as fund interest in bullion softened.
Spot gold was bid at $953.90 an ounce at 1440 GMT, against $953.65 an ounce late in New York on Wednesday.
The market briefly slipped to a session low of $943.10 -- responding to fleeting dollar strength after stronger-than-forecast U.S. retail sales numbers.
The U.S. currency later fell, making gold cheaper for non-U.S. investors, as markets concentrated on concerns about a rising U.S. budget deficit.
Buying by exchange-traded funds was relatively soft, with neither the largest gold ETF, the SPDR Gold Trust, or London's ETF Securities reporting inflows on Wednesday.
"Investment flows have slowed a little bit," said James Moore, analyst at TheBullionDesk.com.
"We've still got the background concerns surrounding inflation but for now the market may need to come a little bit lower to pick up some fresh demand."
Potential inflationary worries were reflected in oil prices, with crude now topping $72 a barrel.
"Whilst the longer term picture is still very supportive for gold, in the short term the market is overbought and possibly back to towards the $935, maybe the $925 area before we can pick up some fresh demand," TheBullionDesk's Moore added.
SOFT DEMAND
Gold buying in the world's largest bullion consumer, India, remained slow on Thursday, with dealers unwilling to make fresh purchases as the wedding season nears its end.
"Lack of physical demand has been one of the main problems for gold at these prices," said VM Group analyst Matthew Turner.
"It all depends on investment flows so when those dry up it starts to weaken."
On the supply side, mine output from South Africa fell 13 percent in volume terms in April from a year before, official data showed.
Silver rose to $15.31 an ounce from $15.15 late in New York on Wednesday, while platinum was at $1,259.50 an ounce against $1,261, and palladium firmed to $254.50 against $253.
Consultant GFMS said silver prices could rise as high as $18 per ounce later this year as investment demand for the precious metal takes up the slack from falling industrial usage.
ETF buying of platinum continued, with ETF Securities reporting another small inflow of just over 3,000 ounces on Wednesday. Holdings of the company's ETFS Physical Platinum fund have risen 42,700 ounces or 14 percent in the last week.
While ETF demand is likely to support platinum, price gains could be limited by the chilling effect of this on jewellery buying, one of the only buoyant areas of consumption at a time when industrial demand for the metal is languishing.
"Further platinum price gains could dampen Chinese jewellery demand, which could increase the downside risks, as China is the biggest platinum consumer," Standard Bank said in a note.
