* Dollar hits near 6-month high versus euro on Greece woes
* Indian buying picks up as gold prices fall
* SPDR gold ETF holdings steady but down in 2010 so far
(Updates prices)
By Jan Harvey
LONDON, Jan 21 (Reuters) - Gold prices fell nearly 2 percent
to below $1,090 an ounce on Thursday, their lowest level this
year, as the dollar hit a near six-month high versus the euro,
cutting buying of the precious metal as an alternative asset.
Spot gold <XAU=> hit a low of $1,088.30 an ounce and was bid
at $1,089.55 an ounce at 1627 GMT, against $1,111.10 late in New
York on Wednesday.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell $22.90 to
$1,089.70 an ounce.
The euro slumped to a nearly six-month-low on Thursday,
pressured by concerns over a swelling budget deficit in Greece,
which sparked worries about debt held by several other euro zone
countries. []
Strength in the dollar reduces gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
Daniel Major, an analyst at RBS Global Banking & Markets,
said the dollar had broken through key technical levels and was
expected to firm further. "Gold could see more downside from
that," he said.
"There have been some reasonably positive signs from the
jewellery market, but from the investment side, in the last two
or three weeks we have seen modest but persistent redemptions
from the exchange-traded funds," he added.
"In terms of the net speculative long position on COMEX, the
market still remains reasonably long," he added. "That leaves
potential for some liquidation."
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, were steady on
Wednesday, but are down 21.7 tonnes or 1.9 percent this year. In
the same period of 2009, they rose 22.7 tonnes.
Holdings of the main silver ETF, the iShares Silver Trust
<SLV>, have also fallen 154 tonnes in 2010 to date.
Traders say some investors with an interest in precious
metals ETFs are pulling money out of the SPDR and the iShares
fund in favour of new U.S. platinum- and palladium-backed ETFs.
OIL STEADY
In India, historically the world's largest consumer of gold,
traders continued to buy as prices hit new two-week lows.
On the wider markets, oil prices also fell, while U.S.
stocks declined after shares of major banks and natural resource
companies sold off as investors reassessed a push that drove
Wall Street to 15-month highs earlier this week. [] []
Among other precious metals, spot platinum <XPT=> was at
$1,593.50 an ounce versus $1,622.50, while palladium <XPD=> was
at $452.50 versus $465.
Lease rates for the two metals have risen steadily since the
launch of the ETFs operated by a U.S. unit of London's ETF
Securities, dealers said.
Silver <XAG=> was at $17.38 an ounce against $17.87,
following gold lower.
"Since silver tends to disproportionally track the movements
of gold, and since we expect the gold price to correct in the
spring, silver is likely to weaken temporarily as well,"
Commerzbank said in a note. "Prices could fall to as low as
$15.00 an ounce."
(Editing by Nigel Hunt)
