* Gold ends third straight week lower, down 2 pct YTD
* Dollar rallies vs euro after U.S. GDP beats expectations
* U.S. platinum, palladium ETF flow steadies
(Recasts, updates comments, closing prices, adds NEW YORK to
dateline)
By Frank Tang
NEW YORK, Jan 29 (Reuters) - Gold prices fell on Friday,
posting a third straight week of declines as strong economic
data boosted the dollar and commodity investors remained
cautious of a U.S. proposal to limit bank risks.
The euro hit a rough patch this week against the U.S.
currency, tumbling to below $1.39 due to fiscal fears in
euro-zone countries and strong U.S. data.
A stronger dollar cuts into bullion's appeal as a dollar
hedge. Gold is down about 2 percent so far in 2010.
"We certainly think the dollar run could go for at least
another two or three months, and that could be a negative for
gold going forward," Peter Buchanan, senior economist at CIBC
World Markets in Toronto.
Gold has been under additional pressure since U.S.
President Barack Obama last week moved to restrict some bank
trading operations, including commodities.
Spot gold <XAU=> was at $1,079.05 an ounce at 2:44 p.m. EST
(1944 GMT), against $1,086.75 late in New York on Thursday.
U.S. April futures <GCJ0> settled down $1 at $1,083.80 an
ounce on the COMEX division of NYMEX.
The U.S. GDP report showed the economy in the fourth
quarter grew at its fastest pace in more than six years,
surprising economists. []
A stronger economy could prompt real interest rates to
rise, said Tobias Merath, head of commodity research of Credit
Suisse. This could boost the opportunity cost of holding gold.
"We are now in economic recovery, undoubtedly, and at some
point in the recovery real rates will start rising. That could
be a trigger for more selling of gold," Merath said.
Year to date, gold prices were about 2 percent lower from
the Dec. 31 close of $1,096.35.
U.S. banks and trading houses have been taking advantage of
the price drop to buy call options to profit from possible
price increases and rising volatilities, said COMEX floor
trader Jonathan Jossen.
In Asia, gold bars were offered at the highest premiums in
more than a year as demand from China gained pace ahead of the
Lunar New Year, dealers said. []
But gold is looking vulnerable, according to analysts who
study past price moves to determine future trade.
"The close below the 100-day (moving average) at $1,089 is
a first since July 2009 and increases the odds for a deeper
probe of $1,074/1,067 support -- the December lows and
ten-month trendline -- where we would be looking for basing
signs," said technical analysts at Barclays Capital.
PLATINUM ETF HOLDINGS STEADY
Among other precious metals, silver <XAG=> was at $16.14 an
ounce versus $16.20. Platinum <XPT=> was at $1,497 an ounce
versus $1,508, and palladium <XPD=> at $411 versus $418.50.
Buying of the platinum group metals to back new U.S.
exchange-traded funds tailed off at the beginning of this week,
data from ETF Securities, which operates the funds, showed.
ETFS Platinum's <PPLT.P> holdings unchanged at 214,900
ounces as of Jan. 28, while ETFS Palladium's <PALL.P> holdings
at 399,925 ounces.
Click here for company's website:
http://r.reuters.com/gaz73h
Sentiment had deteriorated earlier this week after news
that Toyota Motor Corp, the world's biggest automaker, is to
suspend U.S. sales of eight models due to a safety recall.
Platinum and palladium are heavily exposed to the auto
sector, as they are mainly used as components in autocatalysts.
A recent Reuters poll showed analysts are positive towards PGMs
this year due in part to an expected recovery in car demand.
[]
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1083.80 -1 -0.1 1096.20 -1.1
US silver <SIH0> 16.190 -0.022 -0.1 16.845 -3.9
US platinum <PLJ0> 1506.00 12.10 0.8 1471.00 2.4
US palladium <PAH0> 412.65 -0.70 -0.2 408.85 0.9
Prices at 2:45 p.m. EST (1945 GMT)
Gold <XAU=> 1078.80 -7.95 -0.7 1096.35 -1.6
Silver <XAG=> 16.16 -0.04 -0.2 16.84 -4.0
Platinum <XPT=> 1496.00 -12.00 -0.8 1465.50 2.1
Palladium <XPD=> 412.50 -6.000 -1.4 405.50 1.7
Gold Fix <XAUFIX=> 1078.50 -4.25 -0.4 1104 -2.3
Silver Fix <XAGFIX=> 16.29 -33.00 -2.0 16.99 -4.1
Platinum Fix <XPTFIX=> 1512.00 2.00 0.1 1466 3.1
Palladium Fix<XPDFIX=> 419.00 0.00 0.0 402 4.2
(Additional reporting by Jan Harvey in London; Editing by
David Gregorio)
