* Gold extends losing streak to 4th day on optimism
* Technical support lifts bullion off early session lows
* U.S. debt-limit debate could benefit gold
* Coming up: Markets eye key December U.S. payrolls Friday
(Recasts, adds comments, link to graphic, updates prices to
market close, market activity)
By Frank Tang
NEW YORK, Jan 6 (Reuters) - Gold fell for a fourth
consecutive session on Thursday as the dollar rose on signs the
U.S. economic outlook was improving, but technical buying
lifted prices off their lows.
Strong economic reports this week including purchasing
managers' indexes, new factory orders and upbeat private-sector
jobs data have driven the dollar higher, diminishing gold's
safe-haven appeal. The data raised expectations that Friday's
key U.S. jobs data will beat forecasts.[] []
"There is always the fear that once the rebound in the U.S.
gets cemented and attracts higher interest rates, investors
start shifting money out of gold and into equities," said
Mitsubishi analyst Matthew Turner.
The S&P 500 <.SPX> stock index was on track for its sixth
straight week of gains, up more than 1 percent so far this week
even after Thursday's slight retreat.
Some investors unwound solid gains made on thin volume in
gold and other precious metals over the holidays. The year-end
rally saw silver hit a series of 30-year highs and palladium
touch a near 10-year peak. Gold had come within $10 of a new
all-time high on Monday.
Spot gold <XAU=> fell 0.4 percent to $1,371.70 an ounce at
3:28 p.m. (2028 GMT) U.S. gold futures for February delivery
<GCG1> settled down $2 at $1,371.70.
Spot silver <XAG=> fell 0.7 percent to $29.05 an ounce.
Trading volume steadied after noticeably busier sessions
earlier this week. U.S. gold futures volume was 5 percent above
its 30-day average, but COMEX silver turnover was about 10
percent below the 30-day average.
A larger-than-expected rise in weekly initial jobless
claims on Thursday did little to alter investors' view that the
economy is gaining traction, putting gold under pressure.
[]
Oil prices lost $2 to $88 a barrel on the dollar strength,
and industrial metals led by copper also fell 2 percent. The
Reuters-Jefferies CRB <.CRB> index fell over 1 percent after
the global commodities benchmark zigzagged in a volatile week.
[] []
Some analysts said underlying risk in the global economy
should still boost gold to record highs despite better U.S.
economic data.
"The debt problems in the euro zone's periphery haven't
gone way... A tussle over the U.S. debt ceiling has the
potential to further roil markets, lending support to gold in
the next 2-3 months," said Peter Buchanan, senior economist at
CIBC World Markets.
U.S. Treasury Secretary Timothy Geithner stepped up
pressure on Republican lawmakers to raise the nation's $14.3
trillion debt limit, warning failure to act would lead to an
economic catastrophe. []
TECHNICAL BUYING
On charts, gold cut early losses, bouncing off lows at
around $1,362 an ounce, a key support level in line with a
series of lows set in December, said Adam Hewison, president of
MarketClub.com. (Graphic: http://link.reuters.com/gah25r)
Hewison said gold's bounce up from session lows signals
that it has found support after falling this week.
"Every time when gold had gotten down to these levels, it's
very close to making a reversal higher," he said.
Gold has risen toward its record $1,430,95 an ounce level
three times since November but failed each time.
Investment demand for gold-backed exchange-traded funds
remained lackluster, with holdings of the world's largest gold
ETF, New York's SPDR Gold Trust <GLD>, dropping by nearly four
tonnes on Wednesday to their lowest in early June. []
Barclays Capital raised its 2011 forecast to $1,495 an
ounce from a previous view of $1,445 in November.
"A clouded macro environment against a backdrop of low
interest rates, growing uncertainty surrounding currency
debasement and medium-term inflation fears as well as
geopolitical tensions continue to stoke investor's appetite for
a portfolio diversifier and a safe haven," Barcap's precious
metals analyst Suki Cooper said in a note on Thursday.
Platinum <XPT=> inched up 0.1 percent to $1,727.74 an ounce
and palladium <XPD=> dropped 1.8 percent to $759.47 after
rising above $800 an ounce on Monday, its highest in nearly 10
years.
Prices at 3:30 p.m. EST (2030 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCG1> 1371.70 -2.00 -0.1% -3.5%
US silver <SIH1> 29.126 -0.072 0.0% -5.9%
US platinum <PLJ1> 1732.70 2.40 0.1% -2.6%
US palladium <PAH1> 762.90 -12.40 -1.6% -5.0%
Gold <XAU=> 1371.04 -6.61 -0.5% -3.4%
Silver <XAG=> 29.06 -0.18 -0.6% -5.8%
Platinum <XPT=> 1727.74 1.24 0.1% -2.2%
Palladium <XPD=> 759.47 -13.53 -1.8% -5.0%
Gold Fix <XAUFIX=> 1368.50 -7.50 -0.5% -3.0%
Silver Fix <XAGFIX=> 29.08 -13.00 -0.4% -5.1%
Platinum Fix <XPTFIX=> 1731.00 4.00 0.2% 0.0%
Palladium Fix <XPDFIX=> 766.00 4.00 0.5% -3.2%
(Additional reporting by Jan Harvey and Amanda Cooper in
London; Editing by David Gregorio and Marguerita Choy)
