* Respite from rising Treasury yields
* Physical demand emerges
* Coming up: U.S. initial weekly jobless claims; 1330 GMT
(Updates with comment, refreshes prices)
By Amanda Cooper
LONDON, Dec 9 Reuters) - Gold steadied around one-week lows
on Thursday, as U.S. Treasury yields fell for the first time in
three days, a day after a sharp sell-off that knocked the
bullion price from a record high.
This week's quarter-point rise in 10-year Treasury yields to
six-month highs has boosted the dollar and unnerved investors
over the near-term economic impact of Washington's plans to
extend a series of tax cuts.
Gold has come under pressure as the dollar has benefited
from greater yield appeal and the perception that U.S.
government efforts will result in longer-term growth. The metal
is set for its largest weekly fall since late October, having
hit record highs earlier this week.
Spot gold <XAU=> was last quoted at $1,383.40 an ounce at
1210 GMT, up 0.2 percent on the day, having fallen for two
consecutive days away from Tuesday's $1,430.95 record high.
U.S. February gold futures <GCG1> were down $0.50 an ounce at
$1,382.90.
"The bias is certainly towards risk-on again and it's a
function of having a couple of points of (U.S. economic) growth
added on because of the extension of the...tax cuts," said
Daniel Brebner, a strategist at Deutsche Bank.
"There's certainly lots of risk around, debt is becoming an
issue in both Europe and the U.S. but right now, the
macroeconomic policy is towards growth and I think the market is
reflecting that."
The so-called opportunity cost of owning gold -- the yield
investors forfeit for holding a non-interest bearing asset --
rises in tandem with bond yields and investors have seen that
cost automatically spiral this week as Treasuries have fallen.
Gold hit its peak on Tuesday, fuelled by a flurry of
fund-buying ahead of the year-end and a resurgence in risk
aversion stemming from Europe's deepening debt crisis, which has
pummelled the government bonds of the euro zone's most
economically fragile members.
With the 3 percent decline seen over the last three days
however, physical demand has resurfaced, particularly in Asia,
where premiums for physical delivery in Hong Kong held steady,
while scrap supply was muted.
"Stabilization Thursday has been due in large part to
impressive physical demand, with very decent buying across Asia
yesterday," wrote UBS strategist Edel Tully in a note.
"In India alone, our physical sales made Wednesday one of
the top ten days this year, with demand accelerating once gold
fell below $1,390. This should provide longs with some comfort."
Reflecting the lack of appetite for gold this week was a
fourth successive decline in holdings of metal in the SPDR Gold
Trust <GLD>, the world's largest exchange-traded fund backed by
physical bullion. []
Spot silver <XAG=> rose 0.3 percent to $28.39 an ounce,
after declining to a one-week low of $27.96 in the previous
session.
As gold has hit record highs, silver has attracted a flood
of investment demand this year from buyers seeking a cheaper
alternative safe-haven to bullion.
Holdings of silver in the world's largest silver ETF, the
iShares Silver Trust <SLV>, hit a record at 10,941.34 tonnes on
Dec. 7, while the silver price itself is at its highest since
early 1980.
The ratio of gold to silver -- the number of ounces of
silver needed to buy one ounce of gold -- fell to its lowest
since February 2007, before the global financial crisis
unfolded.
The gold/silver ratio has fallen this quarter to around
48.7, from 60.3, denoting silver's outperformance versus gold.
Platinum <XPT=> edged higher, up 0.1 percent on the day at
$1,682.74 an ounce, while palladium <XPD=> rose 2.0 percent to
$738.50, taking some heart from the rise in other industrial
commodities such as crude oil and base metals. [] []
(Additional reporting by Rujun Shen in Singapore; editing by
Keiron Henderson)
