LONDON: Gold rose above $1,230 an ounce in Europe on Wednesday as the dollar retreated from the previous day's 6-week high versus the euro and as a raft of soft economic data prompted buying of the metal as a safe store of value. Prices hovered close to the 1-1/2 month high of $1,237.15 they hit last week, supported by concerns over a slowdown in the global economic recovery. Analysts said that in addition to external factors, the metal was likely to take support from increasing seasonal demand as the third quarter gets underway, with gold buying set to increase in key consumer Indian as its festival season gets underway. "September's trade in gold is expected to move in a generally higher direction, with prices making progress toward the Jun 21 high," said MF Global in a daily note. "The focus should remain on the lack of recovery in risk markets since their decimation in May and June, and on the attractiveness of gold amid an environment of asset price depreciation," it added. PRICES Spot gold was at $1,233.10 an ounce at 0635 GMT compared with $1,229.25 late in New York on Tuesday. Silver was at $18.45 from $18.34. Platinum at $1,510.70 from $1,510. Palladium at $484 from $482.50. DATA/EVENTS German IFO index for August, 0800 GMT. US durable goods orders for July, 1230 GMT. US new home sales for July, 1400 GMT. US FHFA home price index for June, 1400 GMT. US July building permit revisions. MARKET NEWS The dollar gave up some ground versus the euro on Wednesday after touching a six-week high a day before, while the yen pulled back from 15-year highs on the dollar and a nine-year peak on the euro. Oil bounced from a seven-week low as investors looked for relief in US durable goods and oil inventory reports due later in the day, after fears of a double-dip recession intensified with dismal housing data. Asian stocks fell, with Japan's Nikkei at a 16-month low, as investors sold riskier assets after a spate of worrying US economic data, while the yen slipped from a 15-year high on a report Tokyo was considering weakening its currency. European stock index futures pointed to a lower open for equities on Wednesday after sharp declines in the previous session, with poor economic numbers raising concerns about the sustainability of economic recovery. FUNDAMENTALS Gold consumption is set to stay strong in 2010, with India and China providing the main thrust to demand growth and investment increasing, the World Gold Council said in a report released on Wednesday. India's gold demand in the June quarter crawled up 0.2 percent to 164.5 tonnes, thanks to stronger investment demand, data from the WGC showed. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings slipped to 1,297.948 tonnes by August 24 from 1,299.468 tonnes on Aug 19. The world's largest silver-backed exchange-traded fund, the iShares Silver Trust, said its holdings rose to 9,175.38 tonnes by Aug 24 from 9,151.03 tonnes on Aug 5. Chinese gold producer Zhaojin Mining Industry said its mines in the Zhaoyuan region in China's Shandong province resumed production on August 24 after passing safety examinations requested by the local government.

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