* Physical buying re-emerges in Europe as prices subside
* Dollar holds firm against the euro, pressuring gold
* SPDR ETF holdings unchanged in New York
(Updates prices)
By Jan Harvey
LONDON, Dec 23 (Reuters) - Gold prices steadied in Europe on
Wednesday as the metal's slide to a seven-week low in the
previous session prompted buying of physical stocks of the
precious metal.
But a persistently firmer dollar, which hit its highest
since early September versus the euro on Tuesday limited gains.
Spot gold <XAU=> was bid at $1,082.05 an ounce at 1206 GMT,
against $1,083.55 late in New York on Tuesday.
Afshin Nabavi, head of trading at MKS Finance, said many
speculative investors were getting out of the market as the end
of the year approached, with thin trade exaggerating price
moves. But 2010 could bring a recovery, he added.
"Selling seems to be coming from specs liquidating their
positions, and if it hadn't been for physical demand, the market
would have been much, much lower," he said.
"It is very difficult to have an opinion for the next few
days, but I remain positive towards the price of gold in the
coming year. Once everyone is back in their seats, we will see
prices head back towards where they were earlier this month."
Spot gold rose to an all-time high of $1,226.10 an ounce at
the beginning of December.
The dollar hit a two-month peak on the yen in Asia on
Wednesday and remained firm against the euro due to optimistic
U.S. economic data and the steepest yield curve on record.
[]
Strength in the U.S. unit limits gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
Other commodities also held firm on Wednesday, with oil
prices holding near $75 a barrel after industry data showed a
sharp drawdown in U.S. crude stocks and an unexpected fall in
gasoline supply. []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
SUPPORT EYED
Gold prices are eyeing support around $1,060-$1,065, traders
said, having shed 11.5 percent since early December's record
high. If this breaks, it could lead to a further correction,
analysts said.
"In the run-up to year-end, we expect gold to see further
pockets of long liquidation, potentially pulling back to the
$1,050 area," said James Moore, an analyst at
TheBullionDesk.com.
In investment news, the world's largest gold-backed
exchange-traded fund, SPDR Gold Trust <GLD>, said its holdings
stood at 1,132.708 tonnes as of Dec. 22, unchanged from the
previous business day. []
London's ETF Securities said holdings of its gold-backed
exchange-traded products fell half a percent to 7.778 million
ounces on Tuesday from 7.821 million ounces the day before.
Meanwhile India's spot gold prices fell for a second
consecutive session on Wednesday as buyers stayed away expecting
prices to fall further, dealers said. India was the world's
biggest bullion consumer last year. []
"Most buyers expect prices to come down further...they will
be interested when prices stay below 16,500 (rupees per 10
grammes)," said a dealer with a private bank based in Mumbai.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell $3.60 to
$1,083.10 an ounce.
Among other precious metals, spot silver <XAG=> was bid at
$16.90 an ounce against $16.96. Platinum <XPT=> was at $1,399.50
an ounce against $1,393, while palladium <XPD=> was at $352
against $352.50.
(Reporting by Jan Harvey; Editing by Anthony Barker and Sue
Thomas)
