* SPDR Gold Trust holdings up 10.5 T in February

* Last net increase in reserves was in Dec. 2012

* Weak U.S. data, softer dollar lift gold prices

By Jan Harvey

LONDON, Feb 27 (Reuters) — The world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Shares, is on track for its first monthly inflow of metal in more than a year after a run of weaker U.S. data boosted investment interest in gold.

The SPDR fund, which issues securities backed by physical metal and attracted big inflows in the wake of the financial crisis, has added 10.5 tonnes to its reserves so far this month.

That means that, barring a large outflow on Friday, February would be the first month to show an increase since December 2012.

Last year holdings of gold-backed ETFs fell by 881 tonnes, according to data from the World Gold Council and Thomson Reuters GMFS, as gold prices tumbled 28 percent. The SPDR alone saw its holdings drop by more than 550 tonnes.

Investors dumped gold in anticipation of a U.S. Federal Reserve tapering of its bullion-friendly monetary easing programme, which had fuelled investment in the metal by keeping interest rates low, while stoking inflation fears.

A run of below-par economic data has since dampened talk that tapering, announced in December, may accelerate this year.

Some negatives are still there for the gold price, but they’ve been heavily obscured by positives since the start of the year, Natixis analyst Nic Brown said. You’ve had bad weather, which has led to substantially weaker U.S. economic data. That has gone hand-in-hand with lower U.S. interest rates, and a weak dollar.

You can clearly see how those two key factors have resulted in investors changing sentiment, and the huge outflows we saw from physically backed exchange-traded products last year have not just dried up, but have started ever so slowly heading in the other direction, he said.

GLOBAL HOLDINGS RISE

The rise in the SPDR’s holdings has helped overall gold ETF holdings increase by 7.3 tonnes this month, Reuters data showed. with some smaller funds still seeing outflows.

Interest in the products has been piqued by a recovery in gold prices since the start of the year. Spot gold is up just over 10 percent so far in 2014 and 7 percent in February, its best monthly price performance since July 2013.

This year we have price strength, we have a lot more people willing to espouse bullish views, and we’ve had a bit of a shock to the system with the emerging market currency issues reinforcing in some people’s minds that they may need some kind of insurance, Mitsui Precious Metals analyst David Jollie said.

That means there is definitely more buying interest in gold ETFs. On the selling side, a lot of people have already rotated out of the funds, so there’s less incentive to do so now, he added. So the net impact is that compared to last year there has been a big swing in ETF flows from bearish to bullish.