* Weak U.S. data hurts dollar but Trichet comments support
* ECB opts to keep rates unchanged at 1.0 percent
* Platinum, palladium ETF could distract from gold-analyst
(Releads, updates prices, adds comment, detail)
By Jan Harvey
LONDON, Jan 14 (Reuters) - Gold was steady on Thursday,
awaiting direction from currency markets, as the dollar
fluctuated on weak U.S. retail sales data and dollar-supportive
comments from the European Central Bank.
The euro slid to session lows versus the dollar on Thursday
after Trichet's comments, but traders were wary of the U.S. unit
after data showed an unexpected drop in U.S. retail sales in
December.
Spot gold <XAU=> was bid at $1,138.75 an ounce at 1447 GMT,
against $1,137.60 late in New York on Wednesday. U.S. gold
futures for February delivery <GCG0> on the COMEX division of
the New York Mercantile Exchange firmed $2.50 to $1,139.30.
Calyon analyst Robin Bhar said gold's performance was
closely tied to currency moves. "You will need to see a clearer
direction to euro-dollar to provide a signal to gold, whether it
moves higher or lower," he said.
The dollar index <.DXY> slipped after data showed U.S.
retail sales fell unexpectedly in December, and the number of
U.S. workers filing new unemployment insurance applications rose
more than expected last week. []
Earlier the ECB kept benchmark interest rates unchanged at a
record low 1 percent. The bank is expected to stay in a holding
pattern given uneven growth and low inflation. []
"We continue to see potential for additional near-term
weakness (in gold), particularly if, as we suspect, there is a
continuation of the U.S. dollar rally that began in December,"
said Numis Securities in a note.
"The decisive break through $1,000 an ounce could now
provide a solid floor to any correction, although we would not
be surprised to see some panic/stop-loss selling if this level
is breached."
OIL RISES
Oil prices held near $80 a barrel, but gave up some initial
gains after a short-covering rally that lifted them in early
trade ran out of steam. []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
Holdings of the largest gold-backed exchange-traded fund,
New York's SPDR Gold Trust <GLD>, was steady on Wednesday,
having declined nearly 18 tonnes since the New Year. []
On the production side, gold output in South Africa, the
world's third-largest miner of the precious metal, fell 4.9
percent in November, Statistics South Africa said. []
Among other precious metals, silver <XAG=> was at $18.59 an
ounce versus $18.59. Platinum group metals firmed, however, with
platinum <XPT=> at $1,597 an ounce versus $1,574 and palladium
<XPD=> up nearly 3 percent at $434.50 versus $421.50.
The platinum group metals are being underpinned by fresh
investment interest after the launch of new platinum- and
palladium-based ETFs in New York last Friday. The funds added
170,000 ounces of metal in their first two trading sessions.
Interest in platinum group metals-backed ETFs could detract
attention from similar products backed by gold, like the SPDR
fund, Goldman Sachs said in a research note.
"The gold ETFs may face increased competition for investor
demand in 2010 from the introduction of both the platinum (PPLT)
and palladium (PALL) PGM ETFs," the bank said.
"While these new physical-backed ETFs present a downside
risk to gold-ETF demand and gold prices, they represent an
upside risk to platinum prices, and we continue to recommend a
long position in platinum as a 'gold-plus' trade," it added.
(Editing by Sue Thomas)
