PRECIOUS-Gold steadies above $1,040/oz, ETF holdings dip

*Dollar outlook stays bearish amid financial system worry

*SPDR Gold holdings fall 4.575 tonnes last week [GOL/SPDR]

By Risa Maeda

TOKYO, Nov 2 (Reuters) - Gold prices were steady above
$1,040 an ounce on Monday after falling the previous business
day, underpinned by a recovery in the euro versus the dollar.

Bullion fell about 1 percent last week, marking its first
weekly loss since the week of Sept. 25, following four
consecutive weeks of gains.

Spot gold XAU= was almost flat at $1,043.60 an ounce at
0309 GMT, compared with New York's notional close of $1,044.40.

It hit a three-week low of $1,025.75 last week, down more
than $40 from a record above $1,070 marked on Oct. 14, but has
since showed resilience when compared with sharp falls in prices
of other commodities, traders said.

"Investor risk aversion on Friday caused a sell-off in
equities as well as the euro, resulting in a rise in the dollar.
The firming dollar put pressure on gold," said Koichiro Kamei,
managing director at financial research firm Market Strategy
Institute in Tokyo.

"But gold's very role as a alternative to currencies is
supporting its prices on dips," he said.

There are views that the dollar will remain bearish in the
midterm as no immediate change is likely in U.S. monetary policy
given concerns over the financial system, highlighted by news
that CIT Group CIT.N filed for bankruptcy, Kamei said.
[ID:nN01408863]

Buybacks by mining companies to reduce short positions for
hedging were also behind gold's resilience, he said.

U.S. gold futures for December delivery GCZ9 stood at
$1,044.40 an ounce, up 0.4 percent from Friday when the contract
fell $6.70 to $1,040.40 on the COMEX division of the New York
Mercantile Exchange.

The number of noncommercial net long positions in U.S. gold
futures fell to 241,777 lots in the week ended Oct. 27 from
250,107 lots, a weekly report by the Commodity Futures Trading
Commission showed. [ID:nN30320587]

It was the second weekly decline from a record outstanding
253,955 lots.

Net long positions could fall further this month if and when
hedge fund managers lock in profits ahead of their year-end book
closings. But a drastic fall in the number of such positions is
unlikely, Kamei said.

"People won't stop rolling over positions without signs that
the Federal Reserve will from next year consider how to carry
out an exit policy (from its monetary stimulus)," he said.

The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust (GLD: Quote, Profile, Research), said its holdings fell 0.915 tonnes on Friday,
making the total weekly decline to 4.575 tonnes. [GOL/SPDR]
Precious metals prices at 0322 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 1043.90 -0.50 -0.05 18.60
Spot Silver 16.37 0.10 +0.61 44.61
Spot Platinum 1317.00 -5.50 -0.42 41.31
Spot Palladium 321.00 2.50 +0.78 73.98
TOCOM Gold 3031.00 -42.00 -1.37 17.80 36686
TOCOM Platinum 3827.00 -53.00 -1.37 44.31 7457
TOCOM Silver 474.90 -13.20 -2.70 48.73 324
TOCOM Palladium 927.00 -33.00 -3.44 68.55 302
Euro/Dollar 1.4753
Dollar/Yen 89.90
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.