On Friday 23 December 2011, 8:46 EST
* Euro holds at lower levels as U.S. data lifts dollar * Concerns simmer over breadth of euro zone debt crisis * Largest gold ETF reports outflow, Indian demand subdued (Updates prices, releads, adds double byline, adds doubledateline, pvs LONDON) By Carole Vaporean and Jan Harvey NEW YORK/LONDON (Reuters) – Gold finishedslightly lower Thursday, falling with the euro, asinvestors feared European leaders were not much closer tosolving the euro zone debt crisis. Traders were reluctant to add to long positions as year-endapproaches, and most long-term traders were out of the marketuntil 2012, leaving gold prices restricted recent ranges. Spot gold fell to $1,604.30 an ounce by 1505 EST(2005 GMT), having earlier risen as high as $1,616.50. It endedWednesday at $1,614.79. Gold remains up 13 percent on the year. U.S. gold futures for February delivery settled $3.0 an ounce lower at $1,610.60 per ounce in light pre-holidaytrade. the euro slipped on Thursday as investors were unconvincedEuropean leaders were anywhere close to a solution to theregion’s debt crisis, prompting investors to sell into anyrebounds in the single currency. “Our barometer of euro zone money market liquidity (theEuribor/OIS 3-month spread) remains at elevated levels. a dryingup of liquidity poses a serious risk to all commodities,including gold,” said Standard Bank in a note. the euro had risen in earlier trade on hopes the nearly halfa trillion euros in three-year funds that banks borrowed onWednesday from the European Central Bank would ease currentfunding strains. but, doubts remained over how much of the fundswould be lent to boost the ailing euro zone economy or used tocut back exposure to government debt. “People are not looking at gold as a safe haven, and that isone of the reasons for this lacklustre performance,” saidCommerzbank analyst Eugen Weinberg. “I wouldn’t be surprised tosee further weakness in gold prices going forward.” Commodity index rebalancing in early January could have abig impact on prices and positioning of gold. Edel Tully, marketstrategist with UBS Investment Research wrote in a daily reportthat the Dow Jones-UBS Commodity Index will be rebalanced andreweighted from the fifth to ninth business days of January. “With gold’s DJ-UBS index weight set to fall to 9.79 percentfrom 10.45 percent, we estimate approximately 15,550 goldcontracts will be sold,” said Tully’s note. “For gold, this will be the next gauge of whether investorsstart 2012 with the same disappointment with which they ended2011, or with fresh enthusiasm and renewed appetite,” it added. GOLD BELOW 200-DAY AVERAGE the gold price stayed below the 200-day moving average,which sits at $1,623.53 an ounce on Thursday, for the seventhconsecutive close, indicating little appetite for higher levels. “We still see little chance for gains here until year end,”said VTB Capital in a note. “Gold will stall below short-termresistance at $1,620, in our view. the market failed to breachit yesterday, also having tested more resistance at $1,640.” on the physical markets, gold demand in number one consumerIndia remained sluggish, dealers in Mumbai said, largely due toseasonal factors. the period of Khar Mass, from Dec. 16 to Jan.14, is considered inauspicious for gold buying. Holdings of the world’s largest gold-backed exchange-tradedfund, new York’s SPDR Gold Trust, dropped by nearly389,000 ounces on Wednesday, the fund said. among other precious metals, silver was down at$29.05 an ounce from $29.35 previously. Spot platinum slipped to $1,418.49 an ounce from $1,423.49, while spotpalladium was up at $647.79 an ounce from $631.47 atWednesday’s finish. (Reporting by Carole Vaporean; Editing by Alden Bentley)
PRECIOUS-Gold slips as dollar gains in light trade
