* Dollar regains ground against a basket of currencies
* Oil prices sink $6/bbl after Thursday gains
* Firm demand for physical gold underpins prices
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 22 (Reuters) - Gold prices ended lower
on Friday as the dollar rebounded against the euro and oil
prices fell as much as $7 a barrel, denting the precious
metal's appeal as an inflation hedge.
But strong demand for physical gold stocks, such as coins
and bars, continued to underpin the market.
Gold <XAU=> was at $827.00/828.60 by New York's last quote
at 2:15 p.m. EDT (1815 GMT), down from $832.40/833.40 an ounce
late in New York.
"The outlook for the U.S. dollar clearly remains to
strengthen against the euro," said Dresdner Kleinwort
consultant Peter Fertig. "We expect the European Central Bank
will cut rates in the first quarter of next year."
"With oil prices coming down, headline inflation should
decline considerably next year and that would be another nail
in the coffin of the gold bulls," he added.
Adam Sarhan, founder of TheSarhanAnalysis.com, said that
gold must rise above its 50-day and 200-day long-term moving
averages on charts to buck its recent bearish trend.
The dollar rebounded against the euro on Friday, dampening
gold's early gains. The precious metal is often bought as an
alternative investment to the dollar and tends to move in the
opposite direction to it.
The greenback fought back from the previous day's losses
versus a basket of major currencies on Friday, helped by easing
oil prices. []
Crude oil prices fell more than $6 on Friday in the biggest
one-day percentage slide since 2004 as dealers turned their
focus to rising supply levels and weakening global demand.
[]
Gold is rolling back some of the gains it made on
Thursday, when it surged to a one-week high of $839.00 as
demand for bars and coins soared and dollar weakness fueled
interest in commodities as an asset class.
The Reuters/Jeffries CRB <.CRB> global commodities index
posted its biggest weekly gain since 1975. []
U.S. gold futures for December delivery <GCZ8> settled down
$5.50 at $833.50 an ounce on the COMEX division of the New York
Mercantile Exchange.
DEMAND SURGES FOR COINS, BARS
Gold is up nearly $50 an ounce from the nine-month low of
$773 it reached last Friday, as investors in physical gold
stocks returned to the market.
The U.S. mint said in a statement on Thursday that it was
temporarily suspending sales of its American Eagle bullion
coins due a shortage as demand soared. []
European traders also reported that producers were
struggling to keep up with demand for some finished products.
Among other precious metals, silver <XAG=> closed lower at
$13.33/13.37 an ounce from its Thursday U.S. finish of
$13.80/13.87 an ounce.
Spot platinum <XPT=> ended lower at $1,428.50/1,448.50 an
ounce from $1,449.50/1,469.50 an ounce late in New York, having
hit a one-week high of $1,472.50 earlier on Friday.
Its sister metal palladium <XPD=> inched down to
$283.50/291.50 an ounce from its previous finish of
$286.00/294.00 an ounce.
Both the platinum group metals are recovering after
suffering a major sell-off in the wake of a spate of bad
financial reports from carmakers, who consume around half of
the world's platinum each year.
"Platinum has had a disastrous July and early August as
fears over a collapse in global car sales ... completely
overshadowed the few reminders of the metal's precarious supply
situation," said Fortis Bank in a monthly report.
(Editing by Jim Marshall)
