* Gold reverses earlier gains after U.S. data, at 2-wk low
* SPDR holdings dip
* Traders see market heavy, prone to further liquidation
(Recasts, updates prices and comments)
By Rebekah Curtis and Humeyra Pamuk
LONDON, Sept 25 (Reuters) - Gold fell to its lowest in over
two weeks on Friday, reversing earlier gains as the dollar edged
higher versus the euro after the weaker-than-expected U.S.
Traders said the U.S. data and euro's fall prompted long
liqudiation in the market, as investors were disappointed after
bullion failed to break above its previous record high and an
18-month high touched last week.
Spot gold <XAU=> fell as low as $984.70 an ounce, its lowest
since September 10, and was at $988.50 an ounce by 1300 GMT,
versus $993.75 late in New York on Thursday.
"The market's been looking heavy for a while now," said
Simon Weeks, director of precious metals at Bank of Nova Scotia.
"The dollar's a bit firmer generally, bullion's got through the
$990 area which was going to be vulnerable," he said.
The euro edged lower against the dollar on Friday after data
showed orders for U.S. durable goods such as computers and
appliances fell 2.4 percent in August, confounding expectations
for a modest increase.
The data added to lingering concern about the health of the
U.S. economy and caused investors to pare back positions in
currencies such as the euro, seen are more reliant on strong
global growth.[]
"Several people have been looking for higher and it just
hasn't happened. I think it's disappointed long liqudiation,"
Weeks said.
Bullion rallied to an eighteen month-high of $1,023.85 an
ounce last week, within a striking distance of its record high
of $1,030.80 an ounce struck in March 2008.
Group of 20 leaders, holding a two-day meeting, pledged to
keep emergency economic supports in place until a durable
recovery is secured, and to work together when the time comes to
remove them, according to a draft communique obtained by Reuters
on Friday. []
But analysts expected further dollar weakness ahead which
would support the gold prices, as a weaker U.S. currency makes
gold cheaper non-U.S. investors.
"Expectations for ongoing dollar weakness are likely to
generate further investor buying in gold on a worldwide basis,"
said John Meyer, analyst at Fairfax investment bank.
"As confidence returns to markets the dollar, which was seen
as a safe haven, is likely to fall," he said, adding that a
decline in the dollar was likely to be gradual.
For more on the G20 summit, click on: []
PHYSICAL MARKET
Some analysts also said gold could draw support from
resilient demand in the physical market in Asia.
India's gold purchases have picked up as the festival season
gathers pace in the world's largest consumer.
But the world's largest gold-backed exchange-traded fund,
the SPDR Gold Trust <GLD>, said its holdings fell to 1,094.107
tonnes as of Sept. 24, down 0.7 percent from 1,101.735 tonnes
the previous business day. <XAUEXT-NYS-TT>
Silver <XAG=> was lower at $16.03 from $16.18, platinum was
at $1,273 from $1,297.5 and palladium was at $290 from $291.5.
"For most of the precious metals investor inflows have been
very strong," said Dan Smith, analyst at Standard Charted.
"It suggests to us gold is going to remain resilient. Our
advice is you should be long in gold and platinum, and short in
some of the base metals."
(Editing by Keiron Henderson)
