* Euro zone debt concerns set to simmer into new year
* SPDR gold ETF sees biggest one-day outflow since early Oct
* Euro, stocks, Bunds little changed ahead of year-end
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Dec 23 (Reuters) - Gold held steady above $1,380 an
ounce in Europe on Thursday as trade thinned ahead of the
Christmas holidays, but was set for its first weekly gain in
three as worries over euro zone sovereign debt lent support.
Spot gold <XAU=> was bid at $1,383.65 an ounce at 1033 GMT,
against $1,384.55 late in New York on Wednesday. U.S. gold
futures for February delivery <GCG1> fell $3.10 to $1,384.30.
The precious metal is up 0.7 percent this week so far, as
its appeal as a haven from risk rose after ratings agency Fitch
said it could cut Greece's foreign currency rating, and Moody's
threatened to downgrade debt-ridden Portugal.
"The prospect of further downgrades had an impact on the
euro and (also) on gold," said Peter Fertig, a consultant at
Quantitative Commodity Research.
"This is probably calming down in the final few trading days
of this year, but it will remain a topic going into next year.
From that perspective, gold seems to be well supported."
Currency traders are looking ahead to a raft of U.S. data
due later, including U.S. personal income and spending numbers
for November and a report on durable goods orders.
Ahead of this the euro held steady against the dollar <EUR=>
and the Swiss franc on Thursday, helped by supportive comments
from China, but analysts said the outlook for the single
currency was shaky, with fresh losses expected into 2011. []
A weaker euro and consequently stronger dollar would usually
pressure gold, but its usual close inverse relationship with the
dollar has weakened in 2010 as both benefit from risk aversion.
"We expect the New Year to bring... some violent moves
across all asset markets as investment managers position for
another highly uncertain year," said Credit Agricole in a note.
"In the FX space, developed currency moves could become a
'race to the bottom' as debt concerns and liquidity constraints
combine to force otherwise insignificant currencies into strong
appreciations."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
To access interactive graphics on the euro zone debt crisis,
click: http://r.reuters.com/hyb65p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
European shares were flat in thin pre-Christmas trade on
Thursday after hitting a 27-month high for a fourth day, while
Bund futures were flat to slightly weaker on Thursday with
markets pointing to sharper risk appetite into year-end. []
[]
SPDR GOLD ETF RECORDS OUTFOW
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD>, recorded its biggest one-day drop
since early October on Wednesday, with its holdings declining
just over 9 tonnes to 1,288.616 tonnes. []
The fund's holdings are up just over 2 tonnes since the end
of November, against a rise of nearly 16 tonnes in the same
period of last year.
Analysts say gold and the other precious metals could be in
for some hefty gains next year.
While the prospect of tighter monetary policy, initially in
China, could be a threat to the metals, persistent concern over
sovereign debt is likely to benefit gold, while more industrial
precious metals will be supported by economic recovery.
"There are a number of risks clouding the outlook for 2011,
including the threat to growth from the transition to tighter
liquidity conditions in China and uncertainty over the extent to
which sovereign debt contagion will affect other European
countries," said Barclays Capital in a report.
"However, we expect an environment of sustained economic
recovery, more supportive financial market sentiment and
exceptionally easy monetary policy to provide a fertile ground
for price gains early next year.
Among other precious metals, platinum <XPT=> was at
$1,725.49 an ounce against $1,721.50, while palladium <XPD=> was
at $748.97 against $748.25. Silver <XAG=> was bid at $29.20 an
ounce against $29.20.
(Reporting by Jan Harvey; Editing by Alison Birrane)
