* Gold shrugs off firmer dollar as euro zone concerns return
* Pressure grows on Portugal to seek EU, IMF help
* Main gold, silver ETFs saw outflows on Friday
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Jan 10 (Reuters) - Gold held near $1,370 an ounce in
Europe on Monday as the return of concerns over euro zone
sovereign debt as pressure grew on Portugal to seek financial
aid helped offset pressure from a rising dollar.
Spot gold <XAU=> was bid at $1,368.55 an ounce at 1030 GMT,
against $1,368.80 late in New York on Friday. U.S. gold futures
for February delivery <GCG1> fell $1.30 an ounce to $1,367.60.
Prices posted their biggest one-week fall since May 2010
last week after a run of better-than-expected U.S. data lifted
expectations monetary policy could tighten sooner rather than
later. However, the return of concerns over the euro zone has
tempered that dip.
"The escalation of euro zone troubles from here will see a
slight price rebound -- maybe not to the (early January) highs,
but there is some risk-averse buying," said Andrey Kryuchenkov,
an analyst at VTB Capital.
"I would be very wary of any sudden moves here, but
obviously the market is trying to find some ground," he added.
A senior euro zone source said on Sunday that pressure is
growing on Portugal from Germany, France and other euro zone
countries to seek financial help from the EU and IMF to stop the
bloc's debt crisis from spreading. []
The news pressured the euro, which eased 0.1 percent versus
the dollar <EUR=>, with the single currency falling to lows not
seen since mid-September. []
A stronger dollar typically pressures gold, as it makes the
metal more expensive for holders of other currencies and reduces
its appeal as an alternative asset. However, when risk aversion
grows in the euro zone it can lift both assets' haven appeal.
Last year the usual negative correlation between gold and
the dollar weakened at times when the euro zone crisis flared
up, most notably in the second quarter.
European shares fell for a second session on Monday, while
the premium investors demand to hold Spanish and Italian
government bonds rather than German benchmarks rose as a week of
heavy bond supply raised tension in the euro zone's higher
yielding bond markets. [] []
INDIAN BUYERS ATTRACTED
Buying in India, the world's biggest gold consumer, rose on
Monday after last week's price fall attracted buyers back to the
market, as traders sought to stock in anticipation of the
upcoming harvest festival and on wedding demand, dealers said.
[]
But interest in gold-backed exchange-traded funds continued
to be lacklustre, with holdings of the largest, New York's SPDR
Gold Trust <GLD>, dropping by a further 1.5 tonnes on Friday.
[]
Societe Generale said in a weekly note that buying by
exchange-traded funds had been markedly slower as prices rose
above $1,400 an ounce.
"This, of course, does not necessarily mean that investor
appetite has become sated," it said. "ETF purchases, as noted
above, were eclipsed by the very strong demand in (over the
counter) products and there are clear indications that this
demand will remain strong this year."
"This will be driven by Chinese buying at the retail level
in particular," it added.
Holdings of the largest silver ETF, the iShares Silver Trust
<SLV>, also fell more than 53 tonnes on Friday. Spot silver
<XAG=> was at $28.70 an ounce against $28.69. []
Platinum <XPT=> was at $1,730.50 an ounce against $1,731,
while palladium <XPD=> was at $744.50 against $748.50.
(Reporting by Jan Harvey; Editing by Alison Birrane)
