* Gold prices await direction from currency markets
* Indian gold demand abates as prices rise above $1,040/oz
* Silver ETF reports 131-tonne inflow
(Updates prices, adds comment, detail)
By Jan Harvey
LONDON, Oct 30 (Reuters) - Gold prices slipped below $1,040
per ounce in Europe on Friday as the dollar extended gains
against a basket of currencies, helped by a retreat in risk
appetite as U.S. stocks slid after mixed economic data.
Spot gold was bid at $1,037.60 an ounce at 1602 GMT, against
$1,044.95 late in New York on Thursday. U.S. gold futures for
December delivery <GCZ9> on the COMEX division of the New York
Mercantile Exchange fell $9.10 to $1,038.00 an ounce.
"(Gold) is just tracking the U.S. dollar, as usual," said
Citigroup analyst David Thurtell. He said he did not necessarily
believe the dollar's recovery was sustainable, however.
"Sovereign wealth funds are still sellers and central banks
still have the pedal to the metal," he said.
The U.S. dollar index rose on Friday after steep losses in
the previous session. Gold moves in a close inverse relationship
with the dollar, as the metal becomes cheaper for holders of
other currencies when the U.S. unit weakens. []
The euro-dollar rate has moved in recent sessions in line
with risk appetite, with the U.S. currency tending to benefit
from rising risk aversion and falling share prices.
Wall Street stocks fell on Friday as reports painting a
mixed economic picture dashed hopes brought by the economy's
return to growth. Manufacturing was strong in the Midwest area,
data showed, but consumer sentiment slipped this month. []
Stronger-than-expected third-quarter gross domestic product
data had boosted stocks and commodities on Thursday, helping
lift gold. Traders say the metal's resilience after its slip
below $1,030 an ounce has boosted confidence.
"The chart looks favorable after yesterday's move to within
$1.10 an ounce of key support from the Sept. 17 high at
$1,025.80," said MF Global in a note.
DEMAND RETREATS
The light physical demand for gold that emerged in major
consumer India after the metal retreated from record highs
earlier this week is abating, dealers said, as prices resumed
their rise. []
Traders in India said more buying would be seen if the metal
retreated to $1,020 an ounce, or 15,800 rupees per ten grams.
Elsewhere holdings of the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust <GLD>, were
unchanged on Thursday after three sessions of declines.
[]
On the supply side, Harmony Gold Mining <HARJ.J>, the
world's fifth largest gold producer, said that due to the
strength of the rand, it may have to consider restructuring some
of its lowest-grade, highest-cost operations. []
Elsewhere, the London Metal Exchange said it is working with
clearing house LCH.Clearnet to offer a clearing system for the
over-the-counter bullion market. []
Among other precious metals, spot silver <XAG=> was bid at
$16.20, against $16.63 an ounce late on Thursday.
The world's largest silver ETF, the iShares Silver Trust in
New York, said it saw an inflow of 131.43 tonnes on Thursday.
[]
As well as strong investment buying, traders say they are
also seeing a pick-up in industrial demand for silver. The metal
is primarily industrial in application, and is widely used in
electronics manufacturing.
Platinum <XPT=> was at $1,314.50 an ounce against $1,337.50,
while palladium <XPD=> was at $319.50 against $325.50.
Russian miner Norilsk Nickel, the world's biggest palladium
producer, raised its forecast for this year's production of the
white metal to 2.850 million ounces from 2.685-2.710 ounces.
[]
(Reporting by Jan Harvey; Editing by Anthony Barker)
