* Dollar rise on upbeat U.S. data spooks gold investors
* Position squaring by funds ahead of year-end
* Russia state repository to sell gold to cenbank-source
(Recasts, updates closing prices, market activity, comments,
adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Dec 11 (Reuters) - Gold prices hit a
four-week low of $1,109.10 an ounce on Friday, reversing
initial gains as upbeat U.S. economic data bolstered the dollar
and sent bullion investors racing to cut positions.
Signs of economic uncertainties outside of the United
States, highlighted by worries over sovereign debt in Spain and
Greece, also boosted the safe-haven dollar and diminished
gold's appeal as an inflation hedge.
"Clearly, dollar strength will make more recent gold buyers
wonder if they have done the right thing. The action of
investors will depend upon how committed they are to the
long-term bull story in gold," said Rick Bensignor, chief
market strategist of broker Execution LLC in New York.
In the past, gold has served as a safe haven in times of
economic crisis. However, spot bullion is now trading more than
$100 below its record high $1,226.10 reached on Dec. 3, due to
liquidation.
Spot gold <XAU=> was at $1,116.15 an ounce at 2:28 p.m. EST
(1928 GMT), against $1,130.15 late in New York on Thursday. It
rose as high as $1,141.90 an ounce early in trading.
Year to date, gold has still gained 27 percent.
U.S. February gold futures <GCG0> settled down $6.30 at
$1,119.90 an ounce on the COMEX division of the NYMEX.
The dollar turned sharply higher against the euro after
data showed U.S. retail sales rose more than expected in
November, boosting hopes of a self-sustaining economic
recovery. []
The currency extended gains after a survey showed U.S.
consumer sentiment improved in early December.
Year-end book-squaring by institutional investors also
added selling pressure in gold, traders said.
"There is position liquidation before the year-end. The big
players want to get out of positions and take their profits,"
said Miguel Perez-Santalla, vice president of sales at Heraeus
Precious Metals Management.
Among other commodities, oil prices dropped 1 percent to
below $70 a barrel. Gold tends to track crude prices as the
metal can be bought as a hedge against oil-led inflation.
Elsewhere a source at the Russian state repository Gokhran
said on Friday it was likely to sell 30 tonnes of gold to the
country's central bank next week. Traders say central bank
interest in gold as a reserve asset is growing.
[]
CHINA OUTPUT CLIMBS
On the physical side of the market, premiums for gold bars
firmed in Asia after gold retreated from record highs, while
higher Indian jewelry during the wedding season helped offset
scrap sales from other Asian holders, dealers said. []
China's Ministry of Industry and Information Technology
said on Friday the country produced 26.354 tonnes of gold in
October. Gold output in the first 10 months rose 14.1 percent
to 254.552 tonnes, it added. []
China is the world's main gold producer, and is set to take
over from India as the biggest bullion consumer this year as
well, according to the World Gold Council. []
Among other precious metals, silver <XAG=> was at $17.12 an
ounce against $17.37, platinum <XPT=> was at $1,426.50 an ounce
against $1,422 and palladium <XPD=> at $359.50 against
$362.50.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCG0> 1119.90 -6.3 -0.6 884.3 26.6
US silver <SIH0> 17.090 -0.098 -0.6 11.295 51.3
US platinum <PLF0> 1422.70 -1.80 -0.1 941.50 51.1
US palladium <PAH0> 362.15 -2.95 -0.8 188.70 91.9
Prices at 2:34 p.m. EST (1933 GMT)
Gold <XAU=> 1115.60 -14.55 -1.3 878.20 27.0
Silver <XAG=> 17.11 -0.26 -1.5 11.30 51.4
Platinum <XPT=> 1426.50 4.50 0.3 924.50 54.3
Palladium <XPD=> 359.00 -3.500 -1.0 184.50 94.6
Gold Fix <XAUFIX=> 1124.00 -16.00 -1.4 836.50 34.4
Silver Fix <XAGFIX=> 17.51 12.00 0.7 14.76 18.6
Platinum Fix <XPTFIX=> 1429.00 7.00 0.5 1529 -6.5
Palladium Fix<XPDFIX=> 367.00 0.00 0.0 365.0 0.5
(Reporting by Frank Tang and Jan Harvey; editing by Jim
Marshall)
