* Dollar turns lower vs the euro after U.S. jobs, trade data
* India's gold buyers welcome lower prices
* SPDR gold ETF holdings steady after heavy outflow
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, Dec 10 (Reuters) - Gold recovered its early losses
on Thursday as the dollar fell versus the euro on data showing a
narrower-than-expected U.S. trade deficit and better continuing
jobless claims, which cut risk-driven buying of the U.S. unit.
Spot gold <XAU=> was bid at $1,130.20 an ounce at 1407 GMT,
against $1,128.80 late in New York on Wednesday. Earlier it
dropped as low as $1,121.30 an ounce.
Data showed the U.S. trade deficit shrank to $32.94 billion
in October, while the U.S. Labor department said continuing
jobless claims fell to 5.157 million in the latest week from
5.46 million a week before. []. []
The euro rose to $1.4752 <EUR=> after the data from $1.4725
before its release. But analysts say the upward trend in gold,
which took the metal to record highs at $1,226.10 an ounce a
week ago, is unlikely to be resumed before year-end.
"Year-end considerations, book squaring, argue for further
dollar strength, which will keep gold under pressure," said
Calyon analyst Robin Bhar.
"As we go into the new year, with fresh allocations, gold is
one of the commodities that will be in favour due to a whole
host of longer-term positive factors."
Gold's performance will be dependent on further losses in
the dollar. Weakness in the U.S. unit boosts gold's appeal as an
alternative asset, and makes dollar-priced commodities cheaper
for holders of other currencies.
Nonetheless, persistent fears over the outlook for the
global economy and concerns over sovereign debt will continue to
support gold, analysts said.
"There is still a lot of uncertainty next year, which will
support the precious metals," said Saxo Bank senior manager Ole
Hansen. "Gold will definitely have a decent upside and we will
see new highs in the new year."
CORRECTION SEEN
Technical analysts, who study charts of past price movements
to determine the future direction of trade, say gold prices
could see further correction before any further push higher.
"Gold remains vulnerable to further weakness for a push to
$1,100/$1,070 zone before renewed basing potential," said
Barclays Capital in a note.
"It is a similar story for silver following the break of...
November 27 low support at 18.01/17.67, pointing to continued
losses towards $16.09/$15.74 September/October congestion and
potentially beyond."
Silver <XAG=> was bid at $17.37 an ounce against $17.38.
Among other commodities, oil steadied near $71 a barrel on
Thursday after sliding more than 2 percent to a two-month low a
day earlier. Gold tends to track crude prices, as the metal can
be bought as a hedge against oil-led inflation. []
Elsewhere, the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust, said its holdings were unchanged on
Wednesday after an outflow of nearly 14 tonnes a day before,
their biggest drop since July. []
In India, the world's biggest bullion consumer last year,
dealers say buyers are being tempted back into the market after
gold's $100 an ounce retreat from record highs. []
"People are buying on dips," said a dealer at a Mumbai bank.
High prices have weighed heavily on demand for gold this
year in key jewellery buying centres like India and the Middle
East. Global jewellery demand fell by more than a fifth in the
first half of 2009, according to the World Gold Council.
In supply news, South Africa, a major gold producer, said
its output of the precious metal fell 5.8 percent year-on-year
in October. []
Meanwhile platinum <XPT=> was at $1,415 an ounce against
$1,416.50, while palladium <XPD=> was at $362.50 against $362.
(Editing by James Jukwey)
