* Reports of Austrian bank woes lifts dollar vs euro
* Fed meeting eyed for clues on direction of dollar
* SPDR gold ETF reports inflow on Monday
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Dec 15 (Reuters) - Gold fell on Tuesday, pressured
by a rise in the dollar versus the euro, as the single currency
hit a 2-1/2-month low after lacklustre German economic data and
on concerns about euro zone banks.
Spot gold <XAU=> was bid at $1,114.40 an ounce at 1018 GMT,
against $1,126.20 late in New York on Monday. U.S. gold futures
for February delivery <GCG0> on the COMEX division of the New
York Mercantile Exchange fell $7.80 to $1,116.00 an ounce.
The precious metal fell more than 4 percent last week to a
four-week low below $1,110 an ounce, having touched a record
high at $1,226.10 on Dec. 3. Analysts say this consolidation has
allowed gold to build a base for further gains.
"I think the recent retrenchment will simply be a buying
opportunity," said David Wilson, an analyst at Societe Generale.
"A rescaling of $1,200 an ounce isn't beyond the realms of
possibility."
Gold could begin rising even before year-end, he said.
Fresh gains in the yellow metal are likely to be reliant on
further losses in the U.S. dollar. Weakness in the unit boosts
gold's appeal as an alternative asset, and makes dollar-priced
commodities cheaper for holders of other currencies.
A rise in the dollar versus the euro on Tuesday is for the
moment keeping the pressure on gold, as the unit hit a 2-1/2
month high against the euro as concerns about euro zone banks
helped prompt short covering in the safe-haven dollar. []
Reports that Austria had put one of its major banks on a
watch list stung the euro in early European trade, as they
underlined concerns about the stability of the euro zone
financial system and curbed investor appetite for risk.
[]
The euro extended losses after data showing a fall in German
economic sentiment suggested any recovery may be sluggish.
[]
Traders are keenly awaiting comments by the U.S. Federal
Reserve, which starts a two-day policy meeting later in the day.
The bank is likely to repeat a pledge to keep interest rates
near zero for an extended period, even as it may acknowledge
signs of economic recovery.
SCEPTICAL
"So far, the U.S. central bank has remained quite sceptical
of a quick recovery, though still talking inflation expectations
down," said VTB Capital analyst Andrey Kryuchenkov in a note.
"A rate rise is still not expected until 2H10, but the
dollar sentiment could be gradually improving and this would
slow down a much expected price recovery in gold in early 2010."
On the physical side of the market, lower gold prices
attracted purchases from the electronics sector in Japan and
spurred bargain hunting by jewellers in other parts of Asia such
as India, but trading began to slow down ahead of year-end.
[]
India's gold traders picked up bargains on Tuesday in the
middle of the wedding season as the yellow metal reversed early
gains on a strong overseas dollar, dealers said. []
Meanwhile holdings of the world's largest gold-backed
exchange-traded fund, SPDR Gold Trust <GLD>, rose 0.304 tonnes
on Monday to 1,116.551 tonnes the previous day. []
Among other precious metals silver <XAG=> was bid at $17.18
an ounce against $17.36, tracking losses in gold. Platinum
<XPT=> was at $1,434 an ounce against $1,443.50, while palladium
<XPD=> was at $361.50 against $364.50.
"Further chart support (for platinum group metals) is
anticipated around $1390-1410 and $358 as both metals benefit
from improving fundamentals," said TheBullionDesk.com analyst
James Moore in a note.
(Editing by Sue Thomas)
