* Gold slips to two-week low but quickly bounces
* Dollar at highest since early Nov vs euro, currency basket
* SPDR gold ETF saw outflow on Friday
(Updates prices, adds comment)
By Jan Harvey
LONDON, Dec 7 (Reuters) - Gold prices fell 2 percent to
session lows in Europe on Monday on selling prompted by the
dollar's rise to a five-week high versus the euro following
above-consensus jobs data in the previous session.
But prices recovered some lost ground after hitting
resistance above $1,135 an ounce, and a retreat in the dollar
from its earlier highs had removed some of the downward
presssure from gold, analysts said.
Spot gold <XAU=> was bid at $1,141.25 an ounce at 1513 GMT,
against $1,159.55 late in New York on Friday. Earlier it hit a
two-week low of $1,135.80 an ounce.
"Friday's slide and today's breach of $1,149 support seem to
have two forces behind it," said Pradeep Unni, senior analyst at
Richcomm Global Services.
"One, the liquidation pressure at the highs which came in
after the dollar got stronger on the back of surprising job
figures and two, the classic dollar rebound in December due to
book closing, profit taking and the approching holiday session."
Friday's much better than expected non-farm payrolls data
prompted speculation the U.S. Federal Reserve may lift interest
rates from their current historic lows sooner rather than later,
which could help the dollar and cut support for gold. []
But Tom Kendall, precious metals strategist at Mitsubishi
Corp, said while the jobs data and the dollar's subsequent
bounce were pressuring gold, he did not expect to see a
significant change to expectations for U.S. monetary policy.
"I don't think a couple of data points are really enough to
make people re-adjust their expectations of what the U.S.
Treasury and the Federal Reserve are going to be doing in the
next six to nine months," he said.
"The market was generally expecting a move on rates from Q3
2010 onwards, and I think once this settles down that is still
going to be the case."
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell $26.30 to
$1,143.20 an ounce.
DOLLAR SLIDES
The dollar hit a five-week high against the euro <EUR=> and
a currency basket <.DXY> on Monday. The U.S. currency has been
depressed for much of the year on the view that U.S. rates will
stay low while those elsewhere rise.
Analysts say gold has not corrected as deeply as might have
been expected, given its sharp rise in November. "Gold's failure
to collapse more than this may be seen as a sign of support in
the market," said Fairfax analyst John Meyer in a note.
For graphic showing gold's correlation with the euro-dollar,
click: http://graphics.thomsonreuters.com/129/GLD_EURCR1209.gif.
Other commodities also fell, with oil prices easing 1
percent to below $75 a barrel, tracking weaker equities.
European shares slipped with shares of UK lenders pressured by
the possibility of a tax on bankers' bonuses. [] []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation. For a graphic on gold's
relationship with inflation expectations, click on:
http://graphics.thomsonreuters.com/129/GLD_TPSS1209.gif
On the investment side, the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust, said its holdings
eased 1.524 tonnes to 1,129.966 tonnes on Friday. []
Among other precious metals, silver <XAG=> was at $17.98 an
ounce against $18.43, while platinum <XPT=> was at $1,422.50
versus $1,440.50 and palladium <XPD=> at $365.50 versus $371.
ETF Securities' said holdings of its palladium-backed
exchange-traded product <PHPD.L> rose 1.25 percent to a record
640,483 ounces on Friday.
The price of fellow platinum group metal rhodium <RHOD-LON>
fell fell 5 percent to a three and half week low of $2,300 an
ounce.
(Editing by James Jukwey)
