* China lending requirements in view
* US trade deficit narrows; import prices rise
* U.S. consumer sentiment for December beats expectations
(Recasts, updates prices, adds detail/comment)
By Melanie Burton and Michael Taylor
LONDON, Dec 10 (Reuters) - Gold fell one percent on Friday
after China raised bank reserve requirements and U.S. data
showed improvement in the world's top economy, which boosted the
dollar and dulled the allure of precious metals.
Spot gold <XAU=> was at $1,375.29 an ounce at 1527 GMT, from
$1,387.39 late in New York on Thursday. It earlier hit a session
low at $1,371.90, down from a record high at $1,430.95 touched
on Tuesday. U.S. gold futures <GCG1> were lower at $1,377.80.
"The gold market is probably correcting on the back of the
stronger dollar," said BNP Paribas analyst Anne-Laure Tremblay,
adding year-end book squaring was also aiding downside pressure.
"Investors who have performed well this year may be looking
to protect their gains rather at this stage."
U.S. consumer sentiment rose more than expected in early
December while an index of current conditions jumped to its
highest level since January 2008, a survey released on Friday
showed. []
Earlier, data showed the U.S. trade deficit narrowed much
more than expected in October, a Commerce Department report
showed on Friday, which lifted the dollar [] []
"It's a mixture of the (U.S.) data but more importantly the
Chinese news that came out," said Afshin Nabavi, head of trading
at MKS Finance in Geneva. "But at the end of the day we are
still holding up to the same range seen earlier this week.
"We are getting close to the year end and there will also be
some liquidation. It looks like some of the longs are taking
advantage of the rallies."
Earlier however, China's central bank said it was raising
lenders' required reserves by 50 basis points, effective Dec.
20, its sixth official increase this year. []
"Tighter global monetary policy is bad for gold, and this is
tighter monetary policy. But only slightly, and in one part of
the world, so the impact is not huge," said analyst Matthew
Turner at Mitsubishi Corp.
Rising interest rates raise the allure of bank deposits for
investors over gold, while also boosting storage costs for the
metal.
However, concerns over European sovereign debt polished the
metal's appeal as it is seen as a safer investment.
"Prolonged uncertainty over indebted Eurozone countries will
only be gold supportive," said VTB Capital in a research note.
INDIA BUYING
After gold's pull back this week, physical demand has come
in to underpin prices as investors scout for bargains, which
suggests the metal may be finding its feet.
"Tuesday-Thursday was our strongest three-day run of
physical sales to India since late October, when gold was
trading around $1,320," said UBS analyst Edel Tully.
"Physical buying from India and other centres this week was
likely one of the reasons more investor longs didn't liquidate,
as strong physical demand is often a sign that a downtrend is
about to bottom."
Investors are also eyeing a Federal Reserve meeting next
Tuesday, the first after fierce debate on whether the central
bank's further quantitative easing would help the world's
largest economy. []
Tremblay of BNP Paribas said that a number of issues related
to U.S. monetary policy are supportive of gold, including
questions about the value of the dollar and its role in the
international monetary system.
Spot silver <XAG=> sank into negative territory at $28.23
an ounce, against a $28.70 close. In other metals, platinum
<XPT=> was at $1,667.49 against $1,675.99 while palladium <XPD=>
was at $730.22 as against $735.97.
(Editing by Anthony Barker)
