* Dollar recovers as market awaits details of possible QE
* Biggest gold ETF sees further outflow in New York
* Coming up: Minutes of FOMC's Sept. 21 meeting, 1800 GMT
(Updates prices, adds graphic, comment)
By Jan Harvey
LONDON, Oct 12 (Reuters) - Gold eased in Europe on Tuesday
as the dollar rebounded on the back of uncertainty over the
extent of quantitative easing expected from U.S. authorities,
denting interest in the metal as a haven from weak currencies.
Spot gold <XAU=> was bid at $1,344.30 an ounce at 1121 GMT,
against $1,352.95 late in New York on Monday. U.S. gold futures
for December delivery <GCZ0> fell $9.20 an ounce to $1,345.20.
Prices rallied to a record $1,364.60 an ounce last week as
expectations the Federal Reserve would move towards further
quantitative easing to bolster the flagging U.S. economy
undermined the dollar.
Standard Bank analyst Walter de Wet said there had been a
response to higher prices as holders of scrap jewellery were
being tempted to sell gold back onto the market.
"There is some dollar strength, (with) strong support for
the dollar at $1.40 against the euro," he said. "But we also
continue to see scrap coming to the market."
"Despite strong investment demand, the physical market is
providing resistance to the latest move higher."
The dollar rose to a one-week high versus the euro <EUR=> on
Tuesday, extending gains that began in the previous session as
investors worried the U.S. currency had fallen too far, too
quickly. []
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Analysts said the currency market had already priced in
aggressive U.S. monetary easing and that if the Fed does not
press ahead with such a policy at its Nov. 21 meeting, the
dollar is likely to rebound.
"Today's focus will be on the release of the latest Federal
Open Market Committee minutes for any further insight into the
central bank's thinking on further stimulus measures," said CMC
Markets analyst Michael Hewson in a note.
"But given that the U.S. dollar has declined 10 percent
against the euro since the September lows, one has to wonder how
much quantitative easing may already be priced in."
SPDR ETF HOLDINGS DECLINE
Investment interest in gold-backed exchange-traded funds was
soft, meanwhile, with holdings of the world's largest, New
York's SPDR Gold Trust <GLD>, declining by just under 1 tonne on
Monday to 1,287.327 tonnes. []
The trust's holdings have dropped nearly 7.5 tonnes so far
this month, despite a 2.6 percent rise in gold prices.
"It is remarkable that these outflows have not put that much
pressure on gold prices so far," said Commerzbank in a note.
"Physical buying interest in Asia ahead of the major religious
festivals is apparently forming a counterweight."
Among other precious metals, silver <XAG=> was bid at $23.03
an ounce against $23.29, while platinum <XPT=> was at $1,674.50
an ounce against $1,683.15.
Palladium <XPD=> was showing the biggest correction of the
major precious metals on Tuesday, down 1.7 percent at $575.50 an
ounce against $585.45 late on Monday.
However, it has still strongly outperformed platinum so far
this year as analysts predicted firmer fundamental support for
the autocatalyst metal later this year from a recovery the
gasoline-consuming U.S. and Chinese car markets.
Gasoline engines bear a heavier loading of palladium than
platinum in their catalytic converters. Platinum is more exposed
to the more slowly recovering European market, where diesel
engines are more commonly used.
The platinum-palladium ratio -- the number of ounces of
palladium needed to buy and ounce of platinum -- fell to its
lowest since early 2004 this week at just under 2.9.
(Reporting by Jan Harvey; Editing by Jane Baird)
