* Dollar firms vs euro amid fears over euro zone economies
* Oil prices retreat from highs
* Platinum producers Lonmin, Aquarius report lower output
(Updates prices)
By Jan Harvey
LONDON, Jan 28 (Reuters) - Gold slipped on Thursday as the
euro declined versus the dollar amid concerns over the heavy
indebtedness of smaller euro zone economies, although the metal
was supported by bargain hunting.
Spot gold <XAU=> was bid at $1,085.60 an ounce at 1607 GMT,
against $1,087.25 late in New York on Wednesday. The precious
metal had risen as high as $1,095.95 an ounce in earlier trade,
but hit a five-week low of $1,080.80 in Asian trade.
"Currencies are clearly guiding the immediate direction of
the precious metals, especially after fresh trouble brewing in
Portugal, Italy, Greece, (and) Spain now, which threatens to
undermine the health of the common currency," said Pradeep Unni,
senior analyst at Richcomm Global Services.
The euro fell to its lowest level in more than six months
versus the U.S. unit as U.S. data and fears over the outlook for
a number of smaller euro zone economies pressured
higher-yielding currencies. []
Data showed the number of U.S. workers filing new jobless
claims fell less than expected last week, while a separate
report showing U.S. durable goods orders increased less than
expected in December. [] []
Meanwhile, German and French officials denied they were
planning to give Greece financial aid to overcome its budget
problems, while Athens said it would search mainly in Europe for
funds to ride out a worsening debt crisis. []
Gold prices have declined some 4 percent in the last two
weeks as the dollar rallied against the euro <EUR=>, with fears
over Greece's fiscal situation and waning risk appetite lifting
the U.S. unit at the expense of higher-yielding currencies.
Gold retains some support around current levels, however,
as investors take advantage of its recent price dip to buy,
helping prices shrug off the dollar's strength.
"We have had some bargain hunting, especially in platinum
and palladium," said Deutsche Bank trader Michael Blumenroth.
"The gold price is pretty near the lows we have seen since last
October so probably some people think it will go up from here."
APPETITE RECOVERS
Among other commodities, oil retreated after earlier rising
towards $74 a barrel after U.S. President Barack Obama's State
of the Union address and the Fed's decision to keep interest
rates low revived some confidence over economic growth. []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
In production news, the China Gold Association said Chinese
gold output jumped 11.34 percent to a record 313.98 tonnes in
2009, securing the country's position as the world's largest
producer of the yellow metal. []
Silver <XAG=> rose to $16.41 versus $16.54. Holdings of the
world's largest silver exchange-traded fund, the iShares Silver
Trust <SLV>, rose 0.5 percent to 9,384.98 tonnes on Jan. 27, it
said. []
Platinum <XPT=> was flat at $1,502.50, while palladium
<XPD=> was at $418.50 against $411.50.
Lonmin Plc <LMI.L>, the world's number three platinum
producer, said platinum sales fell 13.6 percent in its first
quarter as refined output of the metal declined. []
Fifth-largest miner Aquarius Platinum <AQP.AX> also said its
attributable output fell 14.8 percent year-on-year.
[]
Traders said while the figures were likely to underpin fears
that production will be weak this year, their impact on prices
would be limited. "Mining problems are already in the price, as
everybody is expecting them," said one PGMs trader.
A Reuters poll published on Wednesday showed platinum and
palladium are expected to outperform other precious metals this
year, with a new wave of investor demand boosting prices in
anticipation of increased industrial use. []
(Editing by Sue Thomas)
