LONDON, July 4 : Gold inched lower in Europe on Friday as the dollar held onto the last session’s gains against the euro and as oil prices eased. Concerns over rising inflation are firmly underpinning the metal, however.

Trading is set to be light on Friday with New York closed for the Independence Day holiday, potentially leading to increased volatility in the market.

Gold eased to $931.00/932.00 an ounce at 0940 GMT from $932.70/934.70 late in New York on Thursday.

Nonetheless traders expect to see the metal well supported above $930 an ounce, as inflation fears driven by high energy 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 dipped 1 per cent 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 US payroll data.

A stronger dollar typically pressures gold, which is often bought as an alternative investment to the US currency. A softer greenback makes dollar-priced gold cheaper for holders of other currencies.

Oil prices have also slipped a touch after hitting new all-time highs on Thursday of $145.85 a barrel as tensions between Iran and Israel inspired traders to stock up on oil ahead of the Independence Day holiday.

July 4 weekend marks the peak of the US 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.

In India, the gold holdings of five ETFs rose 4 per cent month-on-month in June to 4.76 tons, 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.

Among other precious metals, spot platinum fell to $2,003.00/2,023.00 an ounce from $2,017.50/2,037.50 late in New York. Spot palladium slipped to $452.50/460.50 an ounce from $460.50/468.50 an ounce, while silver eased to $18.04/18.10 an ounce from $18.21/18.31.—Reuters