* Euro at 2-month high on ECB official's inflation comments
* Correlation to dollar at most positive since Sept
* Fed opts to keep economic stimulus plans on hold
(Updates throughout)
By Amanda Cooper
LONDON, Jan 27 (Reuters) - Gold came under pressure on
Thursday from waning investor appetite for the metal and growing
expectations for rising interest rates that would ultimately
make it less attractive to invest in this market.
A raft of positive economic data from the United States and
more hawkish signals from some other central bank officials have
also sparked speculation that certain major economies would move
to raise interest rates sooner than previously thought.
The European Central Bank's Lorenzo Bini Smaghi said
sharper rises in imported goods' prices carry an inflationary
threat that could no longer be ignored, reinforcing the view
that the ECB could raise rates sooner than expected.
[]
Gold tends to underperform when rates are rising as the
opportunity cost -- the premium investors forfeit by not buying
a yield-bearing product -- increases.
Spot gold <XAU=> was bid at $1,332.30 an ounce at 1350 GMT,
against $1,346.36 late in New York on Wednesday. U.S. gold
futures for February delivery <GCG1> was flat at $1,332.80.
The euro touched two-month highs against the dollar after
Bini Smaghi's comments and its highest in two months against the
yen after ratings agency Standard & Poor's downgraded Japan's
sovereign debt. []
"There is a lot of safe-haven money coming out of gold at
this point. Generally, the macro data has been quite positive,
particularly for the U.S. ... and of course there is a lot more
confidence around Europe as well," said Standard Chartered
analyst Daniel Smith.
"So that's causing a lot of the net spec position in gold to
fall and also the SPDR ETF is dropping pretty sharply and this
is particularly important," he said.
Holdings of gold in the SPDR Gold Trust <GLD>, the world's
largest gold-backed exchange traded fund, were unchanged after
recording their biggest ever one-day fall on Tuesday. []
ETF Securities' London-listed gold fund <PHAU> saw outflows
worth nearly 65,000 ounces on Thursday and has seen metal leave
the fund every week since the start of the year.
The dollar was under pressure from a series of data releases
on Thursday on jobs and demand for big-ticket manufactured goods
that missed expectations. []
But given that gold's usual inverse relation to the U.S.
currency has flipped to its most positive since mid-September,
the weakness in the greenback did little to stem the fall in the
bullion price.
The Federal Reserve on Wednesday left U.S. interest rates
unchanged and reiterated its commitment to its $600-billion
bond-buying programme. While it acknowledged economic data has
improved, the Fed said the pace of growth had not been enough to
generate healthy job creation.
"Though the Fed's firm commitment to buy $600 billion of
bonds is a bullish factor for bullion, preferences for riskier
assets like stocks and high interest rate currencies has also
increased on the back of this," said Praddep Unni, an analyst at
Richcomm Global Services.
"This seems to be dampening gains in gold. In the medium
term to long term, gold's direction is northward biased. Data in
the coming week should give us further clues on the underlying
strength in U.S. economy."
Among other precious metals, silver <XAG=> was bid at $27.46
an ounce against $27.59. Data showed holdings in the largest
silver ETF, the iShares Silver Trust <SLV>, fell to 10,447.70
tonnes on Wednesday from 10,478.08 tonnes. []
ETF selling has helped pressure silver prices more than 11
percent so far this month, taking the gold:silver ratio -- the
number of silver ounces needed to buy an ounce of gold -- to its
highest since late November this month.
"The ratio has been firm this month, moving up from 46.00,"
said technical analysts at ScotiaMocatta in a daily note. "It
will be interesting to see if the 50.00 level proves a barrier
to future gains."
Platinum <XPT=> was at $1,799.49 an ounce against $1,810.50,
while palladium <XPD=> was at $809.72 against $812.50.
(Additional reporting by Jan Harvey; Editing by Jason Neely)
