>Asia spot gold up on weak USD, commods gains

Sydney - Dollar weakness and general commodity price strength boosted spot gold in Asia Friday, and prices are likely to continue closely tracking the dollar.

Traders also noted a pause in gold outflows from the SPDR Gold Trust, the largest physically-backed exchange traded fund, after hefty outflows this week.

At 0704 GMT, spot gold traded at $937.60 a troy ounce, up $3.90 on the New York close.

Markets across the board continued firming after overnight remarks from Chinese central bankers reiterating their ultra-loose monetary policy, after fears of tightening bank lending prompted an 8% drop on the Shanghai stock market Wednesday, sending jitters through global commodity markets.

In base metals, London Metal Exchange copper rallied to a fresh nine-month high of $5,748 a metric ton, up 2.6% on the previous afternoon kerb, and aluminum built further gains after a strong rise overnight, adding some 4.1%.

"Sentiment in the markets is turning at the drop of a hat. We have low volumes, which indicates summer trading," said a Sydney-based trader, who tipped the U.S. dollar to remain the driving force behind gold for now.

This is particularly so after the outflows this week from the SPDR fund, which total 47.7 tons this week so far to 1,072.87 tons.

"Net monthly outflows during July are now set to be the second-largest ever, after April last year," said Barclays Capital, adding it expected jewelry demand to pick up on price dips, which should limit gold's downside.

At 0713 GMT, spot silver traded at $13.61/oz, up 14 cents on the New York close. Platinum stood at $1,188.50/oz, up $7.50, and palladium was at $256.50/oz, down 50 cents.

On Tocom, the benchmark June 2010 gold futures settled at Y2,883 a gram, up Y31, while June platinum futures were down Y56 at Y3,656/gram.

Source: COMMODITIESCONTROL