* Euro firms a touch, dollar retreats
* Largest gold, silver-backed funds see fresh outflows
* Physical gold demand remains strong in Asia
(Updates prices, adds detail)
By Jan Harvey
LONDON, Jan 12 (Reuters) - Gold rose further above $1,380 an
ounce in Europe on Wednesday on a retreat in the dollar, rising
oil prices and firm physical interest from Asia.
Spot gold <XAU=> was bid at $1,382.90 an ounce at 1119 GMT,
against $1,380.45 late in New York on Tuesday. U.S. gold futures
for February delivery <GCG1> eased $1.40 an ounce to $1,382.90.
The metal is clawing back some lost ground after posting its
biggest weekly loss since mid-2010 last week, as a focus on more
positive U.S. data raised the prospect that U.S. authorities may
roll back quantitative easing measures sooner rather than later.
"Last week's slide in gold to around $1,353 was more of a
sell-off...on the fear that the U.S. would report a huge job
growth figure, which did not happen," said Pradeep Unni, senior
analyst at Richcomm Global Services.
"With the euro still deep (in the) debt crisis and physicals
using every dip to buy the metal on anticipation of an extended
rise, there is little downside possibility for gold, at least in
this quarter," he added. "Weakness in the dollar and rising oil
will add to the...reasons to hoard gold."
The euro edged up on Wednesday, rising 0.1 percent versus
the dollar, on speculation that euro zone finance ministers may
raise the lending capacity of the region's rescue fund. []
The precious metal remains firmly underpinned by concerns
over euro zone debt levels, which last year propelled gold
prices to record highs as investors worried about the outlook
for the euro.
"Bullion still attracts investors as your ultimate safe
haven asset in the midst of economic uncertainty, or as an
inflation hedge for the future," said Andrey Kryuchenkov, an
analyst at VTB Capital, in a note.
OIL CLIMBS
Among other commodities, oil prices rose, with Brent crude
climbing to $98 on Wednesday, their highest since October 2008,
as production shutdowns in Norway and Alaska raised expectations
of an accelerated tightening of supplies. []
U.S. crude also rose to within a few dollars of its recent
more than two-year high. Riqing oil prices can fuel demand for
commodities as an asset class, lifting gold.
Gold buying in India, the world's biggest consumer of the
metal, eased on Wednesday as prices rose, but buying remains
strong overall across Asia, particularly in China. Premiums for
gold bars hit their highest in two years on Tuesday. []
"The impressive Chinese demand has been fuelled by lower
prices, the upcoming New Year, and also physical delivery
against the February Shanghai Futures Exchange contract," said
UBS analyst Edel Tully in a note.
"We expect the heavy Chinese demand to persist for another
10 days or so, and turn very light in the five or six days
before the Feb. 3 Chinese New Year, as seen in previous years."
Demand for gold to back exchange-traded funds eased off
further, meanwhile, with holdings of the largest, New York's
SPDR Gold Trust <GLD>, slipping just over 1 tonne on Tuesday.
Its holdings have declined more than 9 tonnes since the start of
the year. []
Holdings of the largest silver ETF, the iShares Silver Trust
<SLV>, also declined, to 10,725.73 tonnes on Tuesday from
10,786.51 tonnes. []
Silver <XAG=> was bid at $29.62 an ounce against $29.50.
Platinum <XPT=> was at $1,785.50 an ounce against $1,765.99,
while palladium <XPD=> was at $801 against $782.
(Editing by Sue Thomas)
