* Dollar firms after U.S. economic data
* SPDR Gold Trust bullion holdings hit fresh record
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, Jan 22 (Reuters) - Gold eased 1 percent on Thursday
as the precious metal struggled to maintain its recent gains in
the face of a firmer dollar versus the euro, with an early
bounce in European stock markets also pressuring prices.
Spot gold <XAU=> was quoted at $848.80/850.80 an ounce at
1408 GMT, down from $854.05 an ounce late in New York on
Wednesday. Earlier it touched a low of $842.95.
U.S. gold futures for February delivery <GCG9> on the New
York Mercantile Exchange fell 80 cents to $849.30 an ounce.
"Gold profited from safe-haven buying from investors
switching out of bank stocks, out of gold, and (worried by)
developments in Europe," said Dresdner Kleinwort consultant
Peter Fertig.
"With the recovery we have seen of especially bank stocks,
gold has come under pressure."
An uptick in the dollar is also weighing on the metal. The
dollar firmed against the euro after weekly U.S. jobless numbers
pointed to a worsening economy and data showed U.S. housing
starts and permits hit record lows in December.
Gold climbed 1.5 percent in the first three sessions of the
week, with strong demand for coins and bars and physically
backed products such as exchange-traded funds fuelling gains.
But its failure to hold onto gains has tempered enthusiasm
for the metal, analysts said.
"Gold has been failing to hold on to its gains beyond $855,"
said Pradeep Unni, senior analyst at Richcomm Global Services.
"It seems uncomfortable holding higher with dollar
continuing to trade firm," he said, adding "Gains seen over the
last two days have been purely supported by fresh asset
allocation and investment demand."
"It is still uncertain whether the gains would hold as the
underlying physical demand is still very weak in key demand
centres like India and Dubai."
But while jewellery buying is weak, demand is strong for
small investment products such as coins and bars, traders said.
"As in October and November, since the beginning of the week
we have seen strong investor demand for physical gold," said MKS
finance head of trading Afshin Nabavi. "There has been demand
for physical kilobars and coins."
ETF DEMAND SUPPORTS
Interest in physically backed products such as
exchange-traded funds -- which issue securities backed by
physical stocks of gold -- has also soared.
The world's largest bullion-backed ETF, New York's SPDR Gold
Trust, said its holdings rose to a record 805.96 tonnes on
Wednesday. []
In Europe, Zurich Cantonal Bank said holdings of its
gold-backed ETF <ZGLD.S> have risen by 9 percent or 283,000
ounces since the end of November. []
Gold has tracked its main external drivers, oil and the
dollar, less this week as safe-haven buying sparked by fears
over the global economy has taken centre stage.
Gold has "defied the dollar this week" and "divorced from
oil as the financial crisis sees further bank shares collapse",
Fairfax analyst John Meyer said in a daily note.
Oil, with which bullion typically trades in line, slipped by
2 percent as investors worried about the outlook for demand.
Among other precious metals, silver <XAG=> edged down to
$11.28/11.36 an ounce from $11.31 an ounce.
Platinum remained broadly rangebound, building a base below
$1,000 after sharp falls in the later part of 2008.
Prices plummeted from a high of $2,290 an ounce in March as
investors worried about the outlook for demand from carmakers,
which account for around half of global platinum consumption.
Platinum <XPT=> was at $928/933 an ounce, little changed
from $923.50 late in New York on Wednesday, while palladium
<XPD=> was at $182.50/186.50 an ounce, down from $183.50.
(Editing by James Jukwey)
