* Down 1 percent on concern over euro
* Futures at 3-week low, spot below 50-day average
* Weak Indian jewelry demand, more outflows from SPDR
(Recasts, updates prices, market activity to close of U.S.
session; adds second byline, dateline, previously LONDON)
By Barani Krishnan and Jan Harvey
NEW YORK/LONDON, Dec 16 (Reuters) - Gold fell more than 1
percent on Thursday as investors took profits and pondered the
euro's near-term direction and remained concerned about the
euro zone debt crisis.
Gold futures fell to a near three-week low while the spot
price of the shiny metal dipped below the 50-day moving
average, indicating it could be headed for a bear market.
Gold's slump came as the dollar recovered against the euro
after data showed positive business conditions in the U.S.
Mid-Atlantic region.
Other commodity markets generally drifted in thin trade,
with the combined energy, metals and agricultural complex
showing volumes at least 30 percent lower from the 30-day
average by midday.
Aside from the euro, investors said few other factors
influenced trading. They said the market shrugged off news
about the Commodity Futures Trading Commission's proposed rules
to regulate trading. []
The euro often provides direction for gold as it is another
trade against the dollar.
The euro rose early on Thursday as a European Union summit
to discuss the debt crisis got underway. But investors had
already cautioned the currency was vulnerable to a sell-off on
lingering euro zone peripheral debt concerns.
European leaders sought to paper over deep divisions on how
best to resolve the debt crisis ahead of the summit, while
Spain and Portugal came under renewed pressure to get their
finances in order. []
Attractive yields on U.S. Treasuries were also luring some
gold investors to diversify into U.S. government debt.
"The Treasury yield is certainly pressuring gold prices,"
said Bruce Dunn, vice-president at Auramet Trading in Fort Lee,
New Jersey. "It's also near month-end, quarter-end and year-end
and people are looking to take profit as the euro continues to
weaken and the debt crisis drags on."
WEAK INDIAN BUYING
New York's benchmark February gold futures <GCG1> settled
down $15.20 at $1,371 an ounce after dipping to $1,362 -- its
lowest level since Nov. 29.
Bids for spot gold <XAU=>, which reflect trades in bullion,
fell to $1,361.65, below the 50-day moving average of
$1,368.86. It recovered to above $1,366 an ounce by 2:30 p.m.
EST (1930 GMT).
Late Wednesday in New York, bids for gold stood at around
$1,380.45.
Some were confident about the longer-term outlook for gold,
saying the futures market was likely to rewrite the Dec. 7
record high of above $1,432.50.
They said that although the euro zone crisis was weighing
on the euro -- and, in turn, gold -- the phenomenon will
ultimately favor the precious metal, as other sovereign debt
crises have done in boosting demand for the safe-haven.
"I don't think we will see a sharp decline in gold prices,"
said Daniel Briesemann, a commodities strategist for
Frankfurt-based Commerzbank. "The fundamental data and
especially the debt crisis in the euro zone and its peripheral
countries is too severe to be too optimistic."
Andrey Kryuchenkov, analyst at VTB Capital in Moscow, made
a similar point.
"Overall, economic uncertainties are gold-positive with the
currency markets still jittery while fiat currency yields are
set to remain low for a prolonged period of time," Kryuchenkov
said. "Safe haven buying will limit the downside on gold in the
short run."
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, eased by 0.6 tonnes on
Wednesday, bringing total inflows in December to 0.4 tonnes
versus inflows of just over 7 tonnes in the same period of
2009. []
In India, the world's largest gold consumer, buying of
jewelry slowed as the wedding season neared its end. Buyers
there also shrugged off the impact of a firmer rupee, which
made dollar-priced gold cheaper in India. []
Buyers "would hardly come...until mid-January," said a
Mumbai-based dealer.
(Additional reporting by Amanda Cooper in London; Editing
by David Gregorio)
