* Dollar strengthens after Trichet comments, hurting gold
* 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 fell on Thursday with the
dollar up against the euro after European Central Bank chief
Jean-Claude Trichet highlighted the importance of a strong U.S.
currency, curbing interest in the metal as an alternative asset.
The euro hit session lows versus the dollar after Trichet's
comments, though traders were wary of the U.S. unit after data
showed an unexpected drop in December U.S. retail sales. []
Spot gold <XAU=> was bid at $1,133.90 an ounce at 1627 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 fell $2.10 to $1,134.70.
"The euro-dollar rate is the main driver in the short term,"
said Calyon analyst Robin Bhar. "Energy markets are also off the
boil... so there is a combination of factors at play."
Oil fell further from the $80 a barrel mark midafternoon,
giving up some initial gains after a short-covering rally that
lifted prices 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.
The euro meanwhile slipped 0.25 percent against the dollar
after the ECB interest rate decision and press conference.
Trichet made his comments on the importance of a strong
dollar after 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."
ETF STEADIES
Holdings of the largest gold-backed exchange-traded fund,
New York's SPDR Gold Trust <GLD>, were steady on Wednesday,
having declined nearly 18 tonnes since the New Year. []
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.
Palladium rose more than 5 percent to an 18-month high on
Thursday, boosted by strong investment demand on the back of the
launch of the new palladium ETF.
Platinum also moved up nearly 2 percent on speculation the
ETFs could reduce the amount of the metals available to the
market this year.
A U.S. subsidiary of London's ETF Securities launched the
products last Friday, and uptake has been healthy. About 170,000
ounces of metals were added to the products in the first two
trading sessions. []
Spot palladium <XPD=> hit a peak of $445.50 an ounce and was
later at $442 an ounce against $421.50. Platinum <XPT=> hit a
high of $1,610.50 an ounce, before easing back to $1,599 against
$1,574. Silver <XAG=> was at $18.53 an ounce versus $18.59.
(Editing by Keiron Henderson)
