* Dollar recovers earlier losses after U.S. trade data
* Equity markets take on firmer tone but caution remains
* India gold demand slips as prices rise; SPDR ETF unchanged
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 10 (Reuters) - Gold slipped 0.5 percent in
Europe on Wednesday, giving up earlier gains, as the dollar
recovered against the euro after the U.S. government reported a
wider-than-expected trade deficit in December.
The precious metal rose as high as $1,082.10 in earlier
trade as the prospects of an imminent rescue package for Greece
lifted the euro.
Spot gold <XAU=> was bid at $1,072.95 an ounce at 1412 GMT,
against $1,076.95 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ0> on the COMEX division of the New York
Mercantile Exchange fell $1.60 to $1,075.10 an ounce.
"Gold is tracking the euro/dollar tick by tick," said
Deutsche Bank trader Michael Blumenroth. "You just have to make
up your mind about currency moves, and then react to that."
"There is still good support at $1,045, which is the level
India was buying gold last year, and below that at the moving
average at $1,025," he added.
The dollar firmed against the euro, recovering earlier
losses, after the U.S. government said the trade deficit grew
more than expected in December. []
The U.S. trade deficit widened to $40.2 billion, according
to the Commerce Department. Wall Street analysts surveyed before
the report had expected the trade deficit to narrow to $36
billion. []
Dollar strength curbs gold's appeal as an alternative asset
and makes dollar-priced commodities more expensive for holders
of other currencies.
Gold rose along with the euro earlier on Wednesday after
German government coalition sources said bilateral financial aid
could be provided for Greece.
Sources also said an agreement on the details of how Greece
would be helped and by which countries could be finalised on the
sidelines of an EU summit on Thursday. []
The markets are also awaiting Federal Reserve Chairman Ben
Bernanke's testimony before the House Financial Services
Committee hearing on unwinding Federal Reserve liquidity
programmes at 1500 GMT.
"The release of... Bernanke's speech on the Fed's strategy
to cease its policy of extremely low interest rates will receive
particular interest," said Commerzbank in a note.
OIL SLIPS
Among other commodities, oil gave up dollar-related gains
made in early trade to slip back below $74 a barrel. Gold tends
to track crude prices, as the metal can be bought as a hedge
against oil-led inflation. []
On the wider markets, world stocks rose and European shares
were higher as sentiment improved on signs the European Union
may arrange a bailout for troubled Greece. [] []
On the physical side of the gold market, Indian demand for
the precious metal tailed off as prices recovered, while
holdings of the SPDR Gold Trust <GLD> exchange-traded fund were
unchanged. [] []
Among other precious metals, silver <XAG=> was at $15.39 an
ounce against $15.41, tracking losses in gold.
Holding's of the world's largest silver-backed ETF, New
York's iShares Silver Trust <SLV>, have risen nearly 46 tonnes
this week, suggesting investment demand for the precious metal
is strong.
Elsewhere platinum <XPT=> was at $1,501.50 an ounce against
$1,502, and palladium <XPD=> at $413.50 against $415.
"Key near-term support is seen from seven-month trendlines
in palladium and platinum at $386 and $1,468, respectively,"
Barclays Capital said in a note.
"Breaks here would likely prove to be the catalyst for the
next leg of precious metal weakness."
(Editing by Sue Thomas)
