* Gold pressured after dollar rises 1 pct vs euro
* Bullion extending rally into third week on safe haven
* Euro-priced gold reaches highest in 1-1/2 months
* Coming up: Chicago Fed index due Monday
(Recasts, updates prices, market activity, new byline, changes
dateline, previous LONDON)
By Frank Tang
NEW YORK, Aug 20 (Reuters) - Gold fell on Friday, snapping
a six-day winning streak, as a sharp rise of the dollar
prompted bullion investors heading into the weekend to lock in
profits from the third straight week of gains.
Gold was headed for a rise of more than 1 percent this
week, which would give it the first three-week rally since
June.
Spot gold <XAU=> was at $1,227.75 an ounce at 12:46 p.m.
EDT (1646 GMT), down slightly from $1,230.10 late in New York
on Thursday. U.S. gold futures for December delivery <GCZ0>
dropped $5.60 to $1,229.80.
On Thursday, gold rose to a high of $1,237.15 an ounce, the
loftiest price since July 1, as its appeal an alternative
investment got a boost from data showing new claims for U.S.
employment benefits unexpectedly climbed to a nine-month high.
"Investors are looking for asset preservation, as they move
back into gold as the overall outlook for U.S. economy starts
to fade," said Frank McGhee, head precious metals trader at
Chicago-based Integrated Brokerage Services.
But the flight to quality gave way on Friday to liquidation
across asset classes from stocks to industrial commodities such
as crude oil and base metals, McGhee said.
Also, the dollar rose sharply against the euro on Friday,
which dented demand for gold, traders said. Weak stock markets
also hit gold. As Wall Street fell sharply for a second day,
some investors sold gold to cover margin calls. The S&P 500
index has dropped almost 3 percent since Thursday. []
The greenback rose broadly on risk aversion, concerns about
the global economy and comments by a senior European Central
Bank official that raised expectations the central bank will
keep monetary conditions loose for some time. []
Gold has been resuming its traditional inverse correlation
with the dollar and a positive link with the euro, analysts
said. The 25-day correlation between gold and the dollar fell
to a plus 0.2 on Thursday, sharply lower than a high of near
0.9 earlier in August.
Still, the dollar and gold have both benefited from
safe-haven flows at times. Gold can break its usual inverse
correlation with the dollar in times of extreme risk aversion.
Gold priced in euros <XAUEUR=R> benefited from the single
currency's slip, rising nearly 1 percent to a 1-1/2 month high
at 969.74 euros an ounce.
ETF INFLOWS CONTINUE
The world's largest gold exchange-traded fund, the SPDR
Gold Trust <GLD> saw fresh inflows on Thursday, when its
holdings rose nearly 4 tonnes to 1,299.468 tonnes -- their
highest since July 27. []
On physical markets, buying continued in India, the biggest
consumer of gold, ahead of a raft of festivals, while a strong
baht helped Thai consumers buy gold despite higher prices,
dealers said. []
Physical gold demand tends to rise in August as jewelers
stockpile inventory ahead of the start of India's festival
season, which starts with Raksha Bandhan on Aug. 24 and extends
until Dhanteras in November, the biggest gold-buying day.
Silver <XAG=> fell to $17.97 an ounce from $18.24, while
platinum <XPT=> was down at $1,507 an ounce from $1,520.50 and
palladium <XPD=> dropped to $473.20 from $481.
The platinum group metals, chiefly used in autocatalyst
manufacturing, have failed to track gains in gold, as
industrial commodities suffered from concerns over growth.
(Graphic: http://link.reuters.com/fut36n)
The platinum-gold ratio -- or the number of ounces of gold
needed to buy an ounce of platinum -- fell to its lowest since
the end of June at 1.23 on Friday, as gold prices fell less
than platinum.
Prices at 1:14 p.m. EDT (1714 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1228.80 -6.60 -0.5% 12.1%
US silver <SIU0> 17.955 -0.372 -2.0% 6.6%
US platinum <PLV0> 1513.60 -13.90 -0.9% 2.9%
US palladium <PAU0> 477.20 -8.45 -1.7% 16.7%
Gold <XAU=> 1226.55 -3.55 -0.3% 11.9%
Silver <XAG=> 17.96 -0.28 -1.5% 6.7%
Platinum <XPT=> 1509.50 -11.00 -0.7% 3.0%
Palladium <XPD=> 476.50 -4.50 -0.9% 17.5%
Gold Fix <XAUFIX=> 1223.50 -7.00 -0.6% 10.8%
Silver Fix <XAGFIX=> 18.14 -31.00 -1.7% 6.8%
Platinum Fix <XPTFIX=> 1512.00 5.00 0.3% 3.1%
Palladium Fix <XPDFIX=> 478.00 5.00 1.0% 18.9%
(Additional reporting by Jan Harvey in London; Editing by
David Gregorio)
