* Currency gyrations sway gold
* Focus on interest rates
* Coming up: U.S. U.Mich consumer sentiment; Friday 1455 GMT
(Updates to add comment, refreshes prices)
By Amanda Cooper
LONDON, Dec 9 Reuters) - Gold rose in choppy trade on
Thursday, as the gyrations in the U.S. dollar put the price on
track for its most volatile session in two weeks while investors
weighed up the outlook for U.S. economic growth.
Weekly U.S. jobless data signalled the economy is
recovering, which boosted risk appetite and knocked the dollar,
while in the euro zone, concern over Ireland's finances stopped
the euro from drawing strength from the greenback's decline.
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Gold swung from intraday gains of nearly 1 percent to a loss
of 0.2 percent in the most volatile trading session since Nov.
25, according to Reuters data.
Gold, which hit a record high earlier this week, has come
under pressure as the dollar has benefited from greater yield
appeal and the perception that U.S. government efforts will
result in longer-term growth.
The metal is set for its largest weekly fall since late
October.
Spot gold <XAU=> was last quoted at $1,384.15 an ounce at
1615 GMT, up 0.2 percent on the day, having fallen for two
consecutive days away from Tuesday's $1,430.95 record high.
U.S. February gold futures <GCG1> reversed earlier losses to
rise $2.1 an ounce to $1,385.40.
"We suggested recently that higher interest rates pose one
of the more significant potential headwinds for spot gold
prices, and the sharp rise in yields to six-month highs does
appear to be slowing gold's recent ascent," said Nic Brown,
Natixis commodities strategist.
The so-called opportunity cost of owning gold -- the yield
investors forfeit for holding a non-interest bearing asset --
rises in tandem with bond yields and investors have seen that
cost automatically spiral this week as Treasuries have fallen.
The pressure on Treasuries resumed on Thursday after weekly
unemployment data showed the four-week moving average of initial
jobless claims held at two-year lows.
"The bias is certainly towards risk-on again and it's a
function of having a couple of points of (U.S. economic) growth
added on because of the extension of the...tax cuts," said
Daniel Brebner, a strategist at Deutsche Bank.
"There's certainly lots of risk around, debt is becoming an
issue in both Europe and the U.S. but right now, the
macroeconomic policy is towards growth and I think the market is
reflecting that."
NEAR RECORD
Gold hit its peak on Tuesday, fuelled by a flurry of
fund-buying ahead of the year-end and a resurgence in risk
aversion stemming from Europe's deepening debt crisis, which has
pummelled the government bonds of the euro zone's most
economically fragile members.
With the 3 percent decline seen over the last three days
however, physical demand has resurfaced, particularly in Asia,
where premiums for physical delivery in Hong Kong held steady,
while scrap supply was muted.
Reflecting the lack of investor appetite for gold this week
was a fourth successive decline in holdings of metal in the SPDR
Gold Trust <GLD>, the world's largest exchange-traded fund
backed by physical bullion. []
Spot silver <XAG=> rallied 1.2 percent to $28.68 an ounce,
after declining to a one-week low of $27.96 on Wednesday.
Platinum <XPT=> fell 0.6 percent to $1,671 an ounce, while
palladium <XPD=> rose 2.0 percent to $738.72, taking some heart
from the rise in other industrial commodities such as crude oil
and base metals. [] []
(Editing by Anthony Barker)
