* Euro rises ahead of outcome of EU meeting on debt crisis
* SPDR gold ETF sees further outflow on Wednesday
* Gold buying in India slows as wedding season nears end
(Updates prices)
By Jan Harvey
LONDON, Dec 16 (Reuters) - Gold firmed in Europe on Thursday
as the euro recovered some lost ground against the dollar ahead
of an EU summit later in the day, at which leaders are trying to
agree on further action to tackle the region's debt crisis.
Spot gold <XAU=> was bid at $1,383.30 an ounce at 1211 GMT,
against $1,380.45 late in New York on Wednesday. U.S. gold
futures for February delivery <GCG1> fell $2.40 to $1,383.80.
The single currency <EUR=> rose 0.2 percent versus the
dollar but is still down nearly 7.5 percent so far this year
after the crisis hit Ireland and Greece, and threatened to
spread to Portugal and Spain.
While gold typically moves in the same direction as the
single currency in the short term, jitters over the stability of
the euro zone have helped lift the metal to a record $1,430.95
an ounce as investors bought it as a safe store of value.
Richcomm Global Services senior analyst Pradeep Unni said
that while few surprises were expected from Thursday's summit,
"the market seems grasping to the fact that euro zone members
are attempting to be more pro-active to yet another debt
surprise".
"Though fundamentally the euro is weak, this pro-activeness
is adding to the gains in euro," he said. "Gold may have to
succumb to year-end profit-taking and laggardness, but the trend
still seems to be pointing higher with a possibility of new
highs being scaled as we step into the New Year."
At Thursday's summit EU leaders will discuss changing the
bloc's treaty to create a permanent crisis-resolution mechanism
from 2013, and may look at enlarging their existing crisis fund.
[]
EU officials are conscious that any failure to take decisive
action could be interpreted as weakness, with the threat of
further bond market fallout early next year. []
"Should a clear and sustainable solution to the debt crisis
not become more likely after the meeting, the uncertainty of
market players should generally increase," said Commerzbank.
"Although this would continue to weigh on the euro, gold
could profit as a safe haven in contrast to other commodities."
EURO FIRMS
The euro rose to a session high against the dollar after an
auction of Spanish debt saw decent demand, but quickly gave up
those gains after Spain had to pay higher costs to sell 10-year
and 15-year bonds. []
European shares also firmed, although traders were cautious
ahead of the meeting. Shrinking trading volumes in Asian stocks
have been seen as a tell-tale sign that investors comfortable
with their cash allocations are heading to the sidelines for the
rest of the year. [] []
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, eased by another 0.6
tonnes on Wednesday, bringing their total outflows in December
to date to 0.4 tonnes versus inflows of just over 7 tonnes in
the same period of 2009. []
In India, the world's largest consumer of the precious
metal, gold buying slowed as the wedding season neared its end,
shrugging off the impact of a firmer rupee, which makes
dollar-priced gold cheaper for local buyers. []
"Demand is slightly thin," said a Mumbai-based dealer. "They
would hardly come to buy until mid-January."
Elsewhere silver <XAG=> was bid at $29.11 an ounce against
$28.79, platinum <XPT=> was at $1,696.99 an ounce against
$1,695.50 and palladium <XPD=> at $752 against $746.72.
Among other commodities, oil and most base metals prices
eased amid nervousness ahead of the EU meeting. [] []
New investments in U.S. commodity products and mutual funds
hit three-month highs in November, Lipper data showed on
Wednesday, while regulators mulled ways to limit excessive
speculation in the sector. []
(Editing by Sue Thomas)
