Gold slips 1.3 percent as euro retreats

By Jan Harvey

LONDON (BestGrowthStock) – Gold fell 1.3 percent on Thursday to close in on $1,360 an ounce as a recovery in the dollar pushed the metal through key support levels, though losses were limited by persistent concern over the euro zone debt crisis.

The euro briefly turned lower against the dollar after U.S. jobs data and later extended losses after another report showed an index of business conditions for the U.S. Mid-Atlantic region rose in December.

Spot gold fell as low as $1,361.35 and was bid at $1,365.80 an ounce at 1549 GMT, against $1,380.45 late on Wednesday. Earlier it hit a high of $1,386.35. U.S. gold futures for February delivery fell $19.30 to $1,366.90.

Spot prices hit a record $1,430.95 an ounce earlier this month on the back of concerns over euro zone debt levels. Allowing for day-to-day fluctuations, these will provide ongoing support to prices, analysts said.

“I don’t think we will see a sharp decline in gold prices,” said Commerzbank strategist Daniel Briesemann. “The fundamental data and especially the debt crisis in the euro zone and its peripheral countries is too severe to be too optimistic.”

The dollar swung higher against the euro on Thursday, rising 0.2 percent. Sentiment toward the single currency remains fragile as leaders meet at a European Union summit today.

The single currency is down nearly 7.5 percent so far this year after concerns over debt hit Ireland and Greece, and threatened to spread to Portugal and Spain.

At the summit EU leaders will discuss changing the bloc’s treaty to create a permanent crisis-resolution mechanism from 2013, and may look at enlarging their existing crisis fund.

EU officials are conscious that any failure to take decisive action could be interpreted as weakness, with the threat of further bond market fallout early next year. (GVD/EUR: )


“Overall, economic uncertainties are gold-positive with the currency markets still jittery while fiat currency yields are set to remain low for a prolonged period of time,” said VTB Capital analyst Andrey Kryuchenkov.

“Safe haven buying will limit the downside on gold in the short run.”

While gold typically moves in the same direction as the euro in the short term, jitters over the stability of the euro zone have helped lift the metal this year.

Holdings of the world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Trust, eased by another 0.6 tones on Wednesday, bringing their total outflows in December to date to 0.4 tones versus inflows of just over 7 tones in the same period of 2009.

In India, the world’s largest consumer of the precious metal, gold buying slowed as the wedding season neared its end, shrugging off the impact of a firmer rupee, which makes dollar-priced gold cheaper for local buyers.

“Demand is slightly thin,” said a Mumbai-based dealer. “They would hardly come to buy until mid-January.”

Elsewhere silver was bid at $28.52 an ounce against $28.79, platinum was at $1,684.99 an ounce against $1,695.50 and palladium at $735.50 against $746.72.

Among other commodities, oil and most base metals prices also eased on Thursday.

(Additional reporting by Amanda Cooper; editing by Keiron Henderson)

Gold slips 1.3 percent as euro retreats