* Euro slides after Greece's second downgrade in a week
* Gold tracks oil, other commodities lower
* ETFS Physical Palladium ETP holdings hit record
(Updates prices, adds comment)
By Jan Harvey
LONDON, Dec 17 (Reuters) - Gold prices fell more than 2
percent in Europe on Thursday, pressured by the dollar's
strength against the euro as new concerns emerged over Greece's
fiscal health.
Spot gold <XAU=> was bid at $1,114.40 an ounce at 1353 GMT,
against $1,137.80 late in New York on Wednesday. Earlier it
touched a low of $1,112.50.
"People are locking in profits ahead of year-end," said Saxo
Bank senior manager Ole Hansen.
"The way the dollar has been strengthening is eroding some
of the profit that has been generated on investments (such as
gold), and that leads to squaring elsewhere."
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell $21.00 to
$1,115.12 an ounce.
The dollar hit three-month highs against a currency basket
and rose against the euro as concerns over fiscal troubles in
peripheral euro zone countries gathered pace, with Greece seeing
the second downgrade of its credit rating in a week. []
A statement by the Federal Reserve in which it voiced
growing optimism on the U.S. economy after it left interest
rates unchanged on Wednesday also supported the dollar.
"As the markets get further confirmation that the U.S.
economy is gathering strength, the dollar's strength may force
gold to slide lower," Pradeep Unni, a senior analyst at Richcomm
Global Services, said.
The Fed voiced growing optimism on Wednesday over the U.S.
economy as job losses slow, but said it would keep interest
rates low for "an extended period". []
In a post-meeting statement, the Fed highlighted improvement
in the battered housing sector and noted last month's fall in
the unemployment rate.
UPWARD TRAJECTORY
"The overall tone was more than sufficient for the
greenback to extend its upward trajectory, especially amid the
rapid concentration of euro zone-centric credit and banking
problems," said CMC Markets chief market strategist Ashraf Laidi
in a note.
Strength in the U.S. unit reduces gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
Many other commodity prices also fell, with oil down 1
percent as the dollar's rise curbed buying. Gold tends to track
crude prices, as the metal can be bought as a hedge against
oil-led inflation. []
New York investors showed renewed interest in
exchange-traded funds, with holdings of the world's largest
gold-backed ETF, the SPDR Gold Trust <GLD>, rising nearly 4
tonnes on Wednesday, the trust said. []
Earlier this month the fund saw its biggest outflow since
July as gold prices slipped.
In India, the world's biggest bullion consumer last year,
gold prices fell in the physical market as buyers stayed away,
expecting another fall in prices, dealers said. []
Among other precious metals, silver <XAG=> was bid at $17.32
an ounce against $17.67, while platinum <XPT=> was at $1,428.50
an ounce versus $1,451.50. Palladium <XPD=> was bid at $367 an
ounce against $371.50.
Investment interest in the metal was strong, with holdings
of ETFS Physical Palladium <PHPD.L>, an exchange-traded product
operated by London's ETF Securities, rising more than 10,000
ounces on Wednesday to a record 658,743 ounces.
(Editing by xxx)
