LONDON, Dec 18: Gold up in Europe on Thursday as the dollar weakened, but remained rangebound, with analysts expecting the metal to consolidate after recent sharp gains.

Investor interest in the precious metal remains robust, with bullion holdings of the world’s largest exchange-traded fund, the SPDR Gold Trust, rising to a record level.

Spot gold was quoted at $876.60/878.60 an ounce at 0953 GMT, up from $866.90 late in New York on Wednesday, when prices rose to a two-month peak of $881.20.

Prices have risen more than $130 an ounce month-on-month as the dollar weakened against the euro.

A gold price movement of the size of yesterday would be suprising. The precious metal was taking support from some fresh dollar weakness, as the US currency slipped to fresh 2-1/2 month lows against the euro.

The other main external driver of gold, oil prices, were little changed around $40 a barrel as the market digested an output cut from Opec on Wednesday.

Investor demand for exposure to bullion prices through exchange-traded funds, which issue securities backed by physical gold, remained firm.

The world’s largest gold-backed ETF, the SPDR Gold Trust, said its bullion holdings rose 6.1 tons or almost 1 per cent on Dec 17 to a new record high.

The trust, which issues securities backed by physical stocks of gold, now holds 775.33 tons of bullion. Its holdings are up 17.5 tons or 2.3 per cent week-on-week.

However, demand for small investment products such as coins and bars has dipped in Europe from recent highs, traders say.

The market is looking ahead to economic data due out later in the session for clues as to the next direction for gold.

Watch out for the US Philadelphia Fed Business outlook and leading indicator indices later today -- negative statistics are expected for both, said Standard Bank analyst Manqoba Madinane.

Worse-than-expected data should keep the greenback on the back foot, which should also benefit precious metals. Among other precious metals, platinum and palladium inched up, tracking gains in gold, despite more bad news from the car industry, the main consumer of both metals.—Reuters