* Gold falls 3.6 pct on dollar strength, low physical demand
* Euro likely to see further losses ahead of ECB meeting
(Updates prices, adds comments)
By Anna Stablum
LONDON, Jan 12 (Reuters) - Gold shed 3.6 percent on Monday
dragging the other precious metals lower as oil dropped and the
euro extended losses against the dollar, while physical demand
was seen softening.
"Once gold breached the key support at $840 an ounce, it was
quickly dragged to the next support at $828," said analyst
Pradeep Unni at Richcomm Global Services.
By 1447 GMT gold <XAU=> had trimmed losses to trade at
$829.55 an ounce, down 2.8 percent from $853.60 in New York late
on Friday.
Earlier it hit $823.30, the lowest level since Dec. 15.
"Physical demand in the key demand centres continues to be
lethargic with limited purchases," Unni said, adding gold could
drop substantially in the next couple of months.
Traders said it was the firm dollar and soft oil price that
drove gold lower, dragging down the precious metals complex.
"The dollar is slightly higher and oil is weak," a European
trader said.
Investors awaited the European Central Bank's policy meeting
on Thursday, which could set the direction of the dollar amid
expectations of more rate cuts keeping the euro on the
defensive. []
The euro <EUR=> fell to $1.3412 amid talk of an aggressive
cut in eurozone interest rates later this week, with speculation
rife the central bank will cut its key lending rate by 50 basis
points to 2 percent. []
"The euro is likely to fall as the European Central Bank
cuts rates to stem the decline in the Euro zone economy," said
Citi's analyst David Thurtell.
Oil <CLc1> dropped below $39 a barrel on persistent worries
about falling demand following Friday's dismal U.S. payrolls
report, which showed 1.1 million jobs lost since November and
the highest unemployment rate since 1993. [].
"We expect crude oil to remain weak in the first quarter,"
said Standard Bank in a report.
"Precious metals, especially gold, should find little
support from this front," it added.
Physical demand for gold was seen softening after holding
firm in the normally very strong fourth quarter.
"It tends to tail out in the first quarter ... the market
over the next few weeks will probably focus on weaker demand,"
said analyst Michael Widmer at BNP Paribas.
Gold has bounced more than 20 percent since tumbling to a
13-month low around $680 in late October. Bullion struck a record
$1,030.80 last March.
On COMEX, speculative gold players boosted their net long
positions to 133,604 at Jan. 6, up from 125,961 net longs at
Dec. 30, Commodity Futures Trading Commission data showed.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said it held 787.60 tonnes of gold as of
Jan. 9, down 0.28 tonnes from a record 787.88 tonnes on Jan. 7.
[]
Holdings in the trust, which issues securities backed by
physical stocks of gold, began climbing again in December after
poor prospects for the global economy ignited demand for bullion
as a safe-haven asset. <XAUEXT-NYS-TT>.
Platinum <XPT=> was trading at $960.50 an ounce after
hitting $944, down 4.9 percent from $992.50 in New York on
Friday. Palladium <XPD=> was lower at $183 after falling to a
low of $183, down 4.2 percent from $191 late in New York on
Friday.
Silver <XAG=> was at $11.09 after touching a low of $10.74,
down 4.5 percent from New York's $11.24.
New York gold futures <GCZ9> fell $26.6 an ounce to $835.2.
(Additional reporting by Pratima Desai in London and Lewa
Pardomuan in Singapore, editing by Editing by Peter Blackburn)
