* Growing optimism over growth, stability hurt gold
* Silver tracks gold prices down to two-month lows
* Gold: silver ratio reaches lowest since end Nov
(Updates prices, adds comment, graphic)
By Jan Harvey
LONDON, Jan 21 (Reuters) - Gold touched a two-month low in
Europe on Friday, pressured by a firmer appetite for assets seen
as higher risk on expectations the economic recovery is gaining
traction, but a retreat in the dollar prevented a steeper drop.
The metal is heading for a third consecutive weekly loss and
its weakest monthly performance since July as a more optimistic
view of global economic growth and stability boosted investment
in stocks and other assets seen as higher risk at gold's
expense.
Spot gold <XAU=> was bid at $1,342.65 an ounce at 1508 GMT,
against $1,345.40 late in New York on Thursday. U.S. gold
futures for February delivery <GCG1> fell $4.80 to $1,341.70.
Spot prices hit a low of $1,337.50 an ounce as financial
markets opened in New York, their weakest since Nov. 18,
tracking losses in U.S. gold futures. Traders cited a rise in
margin requirements for precious metals futures. []
More broadly, analysts say outflows from products such as
physically backed exchange-traded funds suggest investor
appetite for gold is slackening after a run of
firmer-than-expected U.S. economic data and as concerns over
euro zone sovereign debt levels recede.
"There is a real lack of catalysts to provide any sort of
support," said Macquarie analyst Hayden Atkins. "Day-by-day the
data does seem to be supportive of the theory that activity is
pretty good for now, and the expectation is growing that things
will be okay through the year."
"There is nothing definitive either way to push it, and at
the margins (investors) are maybe putting their money somewhere
else rather than putting it in gold."
Gold's slide was limited on Friday by a retreat in the
dollar to two-month lows versus the euro <EUR=>, with the single
currency reaching its highest level since late November, helped
by improving confidence in the euro zone. []
Stock markets moved higher, meanwhile, in both Europe and
the United States as strong earnings from key U.S. companies
lifted appetite for equities. []
"Gold used to be a fear indicator, and as this fear appears
to be leaving the market, the gold price is under pressure,"
said Commerzbank analyst Eugen Weinberg.
INDIAN BUYING RESUMES
Some fresh demand emerged in India, the world's biggest
consumer of the precious metal, as prices hit their lowest since
late November, according to dealers in Mumbai. []
"I may have booked for 200 kgs of gold from yesterday at
$1,346-$1,349," said one. "Buyers all want to take maximum
advantage of falling prices."
Meanwhile silver prices extended losses to a fresh
seven-week low at $27.10 an ounce, pressured by a further
outflow from the world's largest silver-backed exchange-traded
fund, the iShares Silver Trust <SLV>.
Holdings of the trust fell by just over 10 tonnes on
Thursday after recording their biggest one-day drop since late
November in the previous session. It has seen outflows of more
than 346 tonnes so far this year. []
Investment demand was a major driver in silver's more than
80 percent price gains last year.
"Industrial demand for the metal remains at risk from
substitution, given recent price gains," said Barclays Capital
in a report. "Investor interest is critical for silver given its
poor supply and demand dynamics."
The gold: silver ratio -- the number of ounces of silver
needed to buy an ounce of gold -- rose back towards 50 on
Friday, its highest since late November, showing gold is
becoming increasingly expensive compared to silver.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic showing the evolution of the gold:silver
ratio, click on: http://r.reuters.com/zuz57r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Silver <XAG=> was bid at $27.32 an ounce against $27.48.
Elsewhere, platinum <XPT=> was at $1,820.74 an ounce against
$1,808.50, while palladium <XPD=> was at $805.72 versus $808.47.
(Editing by Jane Baird)
