* Gold rallies, heads back towards $1,110 per ounce
* SPDR Gold holdings steady at 1,120.514 tonnes
By Miho Yoshikawa
TOKYO, Dec 18 (Reuters) - Gold prices firmed towards $1,110
per ounce on Friday as the dollar fell versus the euro,
recovering some ground lost in the previous session when it fell
3 percent.
Bullion slipped below the key level of $1,100 per ounce on
Thursday, hitting a six-week low of $1,094.50.
Gold has lost some of its appeal, which lifted it to a record
high of $1,226.10 on Dec. 3, due to a stronger dollar which makes
the precious metal more expensive for holders of other
currencies.
It is currently down about 10 percent below the all-time
peak.
Investec Bank (Australia) Ltd said in a research report that
it expected gold to fall further this year.
"The latest U.S. economic readings spurred some unwinding of
safe-haven gold buying and helped lift the dollar," it said.
"We have already suggested that investors may be setting up
for portfolio readjustments heading into the new year, and still
believe we could see gold tumble considerably further before the
year is done," it said.
Spot gold <XAU=> was at $1,107.30 per ounce at 0254 GMT, up
0.9 percent from New York's notional close of $1,097.80.
Gold is now trading about 10 percent below a record high of
$1,226.10 hit on Dec. 3.
Some market participants remained bullish about gold saying
the precious metal was likely to bounce back next year.
"I think we are seeing an adjustment as we head towards the
end of the year," said Masayo Kondo, president of Fisco Commodity
Ltd in Tokyo.
"I think this offers a good buying opportunity."
Kondo said there were still doubts about the state of the
U.S. financial system, which meant gold still had a role to play
as a safe-haven investment next year.
He noted that U.S. regulators last week closed three more
banks, bringing the number of bank failures so far this year to
133. []
Community and regional banks have been failing at the highest
annual level since 1992.
"Can you imagine what would happen if the same number of
regional banks failed in Japan?"
U.S. gold futures for February delivery <GCG0> was largely
unchanged at $1,107.7 an ounce on the COMEX division of the
NYMEX, after earlier rising as high as $1,109.4.
Futures hit a record high $1,227.50 on Dec. 3.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings held steady at 1,120.514
tonnes as of Dec. 17. []
Gold retail sale volumes in Dubai were stagnant in November
and the first half of December as high prices coupled with the
emirate's debt problems made consumers more cautious abut
spending, traders said on Thursday. []
PRICES
Precious metals prices at 0252 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1107.40 9.60 +0.87 25.82
Spot Silver 17.27 0.14 +0.82 52.56
Spot Platinum 1427.00 6.00 +0.42 53.11
Spot Palladium 360.00 1.00 +0.28 95.12
TOCOM Gold 3209.00 -65.00 -1.99 24.72 69996
TOCOM Platinum 4132.00 -57.00 -1.36 55.81 8542
TOCOM Silver 503.00 -7.00 -1.37 57.53 298
TOCOM Palladium 1047.00 -20.00 -1.87 90.36 118
Euro/Dollar 1.4388
Dollar/Yen 89.74
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Reporting by Miho Yoshikawa; Editing by Michael Watson)
