* Dollar regains lost ground against yen, euro
* SPDR gold ETF holdings decline another 5 tonnes
* China monetary tightening pressures commodities
(Updates prices)
By Jan Harvey
LONDON, Jan 7 (Reuters) - Gold prices eased in Europe on
Thursday as the dollar rose against the euro, with investors
taking profits in commodities and higher-yielding currencies
after their recent gains.
Spot gold <XAU=> was at $1,128.90 an ounce at 1300 GMT,
against $1,137.90 late on Wednesday.
Prices climbed 4 percent in the first three trading sessions
of the year to a three-week high of $1,140.20 an ounce, but
struggled to maintain traction as the dollar recovered. Analysts
say the market is now consolidating at these levels.
"Often what happens when you see things come out of the
starting block a bit too aggressively is that you have this time
of reflection later on when the move has to be confirmed," said
Saxo Bank senior manager Ole Hansen.
In the short term, the dollar remains the main driver of
prices. The dollar index <.DXY>, which measures the U.S. unit's
performance against a basket of six others, rose 0.5 percent as
the euro declined and the yen slid after Japanese Finance
Minister Naoto Kan said he wanted it to weaken more. []
Strength in the dollar cuts gold's appeal as an alternative
asset and makes dollar-priced commodities more expensive for
holders of other currencies.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell 0.6 percent to
$1,129.50 an ounce.
Gold held up better in sterling <XAUGBP=R> and euro
<XAUEUR=R> terms, slipping 0.2 percent to 709.39 pounds and 0.3
percent to 788.54 euros respectively.
Commodity prices were pressured by news of tighter monetary
policy in China, a major consumer of industrial raw materials.
China's central bank surprised markets by raising the
interest rate on its three-month bills for the first time since
August, intensifying its grip on liquidity a day after it
promised to keep credit growth in check. []
Gold has lost the support it has taken in recent days from
strength in other commodities.
REPERCUSSIONS
"The continued driver (for commodities) from a fundamental
point of view is the emerging markets, especially China," said
Hansen.
"If there are any indications coming out that they are
trying to tighten up, it is bound to have some repercussions
across the commodities spectrum."
Oil prices fell back below $83 a barrel, pulling back from
the 15-month high hit a day earlier, while copper prices fell
from a 16-month peak. [] []
Traders will be closely watching key U.S. non-farm payrolls
data due on Friday for clues as to the next direction of the
dollar, which is expected to show a slowdown in U.S. job losses.
"This is the first important number this year," said Michael
Kempinski, a senior gold trader at Commerzbank.
Further selling was seen from the world's largest gold
exchange-traded fund, the SPDR Gold Trust <GLD>, on Wednesday,
with its holdings down 4.876 tonnes. They have declined nearly
10 tonnes in the first three trading days of 2010. []
Among other precious metals, silver <XAG=> was bid at $18.06
an ounce against $18.18, while platinum <XPT=> was at $1,538 an
ounce against $1,555 and palladium <XPD=> at $422 against $426.
Platinum and palladium both hit their highest in more than a
year on Wednesday, lifted by expectations new exchange-traded
products backed by the metals will shortly be launched in the
United States, and hopes for a recovery in car demand.
Over half the world's platinum and palladium supply is
consumed by carmakers for use in catalytic converters.
Volkswagen <VOWG.DE> said on Thursday its Chinese sales rose
more than a third last year, while Ford's <F.N> China vehicle
sales jumped 44 percent in 2009. The company said it is aiming
for strong growth this year. [] []
(Reporting by Jan Harvey; Editing by Sue Thomas)
