* Euro at 2-month high on ECB official's inflation comments
* Fed opts to keep economic stimulus plans on hold
* Largest silver ETF sees further outflow of metal
(Updates throughout, changes dateline, previous SINGAPORE)
By Jan Harvey
LONDON, Jan 27 (Reuters) - Gold fell in Europe on Thursday
as the previous session's price rise dampened physical metal
demand, and as a more positive view of the global economy
reduced interest in the metal as a haven from risk.
A raft of positive economic data from the United States and
more hawkish signals from some other central bank officials have
also sparked speculation that certain major economies would move
to raise interest rates sooner rather than previously thought.
The precious metal, a non-interest bearing asset, tends to
do less well in an environment when rates are rising.
Spot gold <XAU=> was bid at $1,337.45 an ounce at 1058 GMT,
against $1,346.36 late in New York on Wednesday. U.S. gold
futures for February delivery <GCG1> fell $4.00 to $1,337.20.
The euro extended gains to hit a fresh two-month high on
Thursday after ECB policymaker Lorenzo Bini Smaghi said an
expected rise in imported goods inflation cannot be ignored.
The dollar slipped, meanwhile, as a commitment to maintain
economic stimulus measures from the U.S. Federal Reserve
contrasted to what is perceived as a more hawkish stance from
the ECB. []
"Though the Fed's firm commitment to buy $600 billion of
bonds is a bullish factor for bullion, preferences for riskier
assets like stocks and high interest rate currencies has also
increased on the back of this," said Praddep Unni, an analyst at
Richcomm Global Services.
"This seems to be dampening gains in gold. In the medium
term to long term, gold's direction is northward biased. Data in
the coming week should give us further clues on the underlying
strength in U.S. economy."
After a meeting concluding Wednesday, the Fed showed it was
in no rush to cut short its rescue of the U.S. economy, saying
high unemployment still justified its $600 billion bond-buying
plan even though the economy had shown signs of improvement.
[]
The announcement had been closely watched by gold investors,
who were concerned that any move towards tighter monetary policy
could undermine prices of the precious metal.
PHYSICAL DEMAND SOFTENS
Near-term, a dearth of physical demand limited gains. Buying
in India, the world's biggest bullion consumer, fell as buyers
anticipated further price falls, put off by a rebound in prices
on Wednesday after four sessions of losses. []
Physical demand in the second biggest gold buyer, China, is
also expected to weaken after the Lunar New Year, which falls on
Feb. 3 in 2011.
On the investment side of the market, holdings of the
world's largest gold-backed exchange-traded fund, New York's
SPDR Gold Trust <GLD>, were unchanged after recording their
biggest ever one-day fall on Tuesday. []
Among other precious metals, silver <XAG=> was bid at $27.43
an ounce against $27.59. Data showed holdings in the largest
silver ETF, the iShares Silver Trust <SLV>, fell to 10,447.70
tonnes on Wednesday from 10,478.08 tonnes. []
ETF selling has helped pressure silver prices more than 11
percent so far this month, taking the gold:silver ratio -- the
number of silver ounces needed to buy an ounce of gold -- to its
highest since late November this month.
"The ratio has been firm this month, moving up from 46.00,"
said technical analysts at ScotiaMocatta in a daily note. "It
will be interesting to see if the 50.00 level proves a barrier
to future gains."
Platinum <XPT=> was at $1,796.49 an ounce against $1,810.50,
while palladium <XPD=> was at $805.47 against $812.50.
(Editing by James Jukwey)
