* Euro slips, looks vulnerable after Ireland downgrade
* Charts show price dip opens prospect of further move lower
* SPDR gold ETF sees further outflow; Indian demand soft
(Updates prices)
By Jan Harvey
LONDON, Dec 17 (Reuters) - Gold slipped below $1,370 an
ounce on Friday as the dollar moved higher versus the euro, with
the single currency hit by concerns over euro zone sovereign
debt levels after Moody's cut Ireland's credit rating.
Spot gold <XAU=> was bid at $1,368.10 an ounce at 1610 GMT
against $1,370.46 late in New York on Thursday. U.S. gold
futures for February delivery <GCG1> fell $1.10 to $1,369.90.
The precious metal is moving closely in line with
fluctuations in the euro-dollar exchange rate as the financial
markets wind down for Christmas.
"Risk aversion is not high enough for gold to decouple," VTB
Capital analyst Andrey Kryuchenkov said.
The euro remains vulnerable after the Moody's cut and as an
agreement by European Union leaders on Thursday to set up a
permanent crisis management mechanism failed to calm fears about
the region's debt crisis. []
EU leaders agreed at the summit to make minor changes to the
group's governing treaty to establish a permanent mechanism from
mid-2013 to resolve sovereign debt problems. []
Moody's Investors Service slashed Ireland's credit rating by
five notches to Baa1 with a negative outlook from Aa2 on Friday,
and warned further downgrades could follow if Ireland was unable
to stabilise its debt situation.
Currency fluctuations notwithstanding, gold prices remain in
a relatively tight range, having slipped to a near three-week
low of $1,361.35 an ounce on Thursday.
"We are into a typical end-of-year scenario now, where order
flow more than fundamentals drives the market," said Saxo Bank
senior manager Ole Hansen.
"It will be choppy for the rest of the year but unless we
see any dramatic news, investors are happy with their positions
based on expectations for further price increases into 2011."
POTENTIAL OPENED
Thursday's move below $1,372.30 an ounce opens up the
potential for a fall towards $1,351.50 an ounce, Swiss bank UBS
said in a note.
A break of that level could mean a further move down to
$1,330, while a move through $1,408 would be needed to signal an
end to the correction, it added.
Investor demand for gold-backed exchange-traded funds
remained light, with holdings of the world's largest, New York's
SPDR Gold Trust <GLD>, falling to a two-month low of 1,283.757
tonnes on Thursday. []
Gold buying in the world's biggest bullion consumer, India,
was also subdued as banks closed for a public holiday, and
dealers said trading was expected to remain thin as the wedding
season came to an end. []
Elsewhere a report said China's Guotai Asset Management
plans to launch the country's first mutual fund to invest in
overseas commodity ETFs. [] []
Among other precious metals, silver <XAG=> was at $28.81 an
ounce against $28.87, platinum <XPT=> at $1,689.49 an ounce
versus $1,694.49 and palladium <XPD=> at $731 versus $736.50.
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Graphic showing relative price performance of key
precious metals: http://r.reuters.com/qup62r
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"Near-term price action in the platinum group metals is
being more determined by the search for hard assets and the
rallies in gold and silver, than by immediate industrial
demand," said HSBC in a note.
(Reporting by Jan Harvey; Editing by Alison Birrane)
