* Euro retreats as ECB holds interest rates at record lows
* ECB head Trichet reinforces view rates will stay low
* Coming up: U.S. non-farm payrolls data due Friday
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, March 4 (Reuters) - Gold slipped below $1,135 an
ounce as the euro weakened against the dollar after comments
from European Central Bank president Jean-Claude Trichet
reinforced the view that interest rates will stay low.
Trichet was speaking at a press conference after the ECB
opted to leave interest rates at a record low 1.0 percent
earlier on Wednesday. []
Spot gold <XAU=> was bid at $1,133.30 an ounce at 1448 GMT,
against $1,139.35 late in New York on Wednesday. U.S. gold
futures for April delivery <GCJ0> on the COMEX division of the
New York Mercantile Exchange fell $9.60 to $1,133.70 an ounce.
"There is still a link on a day-to-day and weekly basis
between gold and the dollar, so if the euro weakens gold will
come under pressure," said Standard Bank analyst Walter de Wet.
"We might test down towards $1,100 if the euro goes to $1.30."
"But ultimately, the currency effect is a shorter term
thing," he said. "As long as interest rates are lower, gold's
path is higher."
As gold is a non-interest bearing asset, it tends to benefit
from a low interest rate environment, which reduces the
opportunity cost of holding the precious metal.
The ECB took further steps to unwind the extraordinary help
it has given the euro zone economy in the global crisis on
Thursday, although it still forecasts a fragile recovery.
[]
Fears over the outlook for a number of smaller euro zone
economies -- Portugal, Ireland, Italy, Greece and Spain -- have
helped push the single currency down nearly 5 percent versus the
dollar so far this year.
Among other commodities, oil slid towards $80 on Thursday as
the stronger dollar pressured fuel prices from seven-week highs
after news of another build in U.S. crude inventories. []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
SHARES EDGE UP
On the wider markets, European shares rose after data showed
the number of U.S. workers filing new applications for
unemployment insurance fell last week, while those continuing to
receive benefits fell to the lowest in over a year. []
U.S. stocks rose at the open, lifted by better-than-expected
February retail sales and a drop in initial and continuing
weekly jobless claims. []
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,115.511 tonnes as
of March 3, up from 1,111.556 tonnes in the previous business
day. []
Elsewhere data showed the U.S. Mint's gold coin sales fell
17.8 percent in the first two months of the year to 169,000
ounces from 205,500 ounces a year earlier. []
Among other precious metals, silver <XAG=> was at $17.22 an
ounce versus $17.17, platinum <XPT=> was at $1,57.50 an ounce
versus $1,575.50, and palladium <XPD=> at $454 against $446.50.
Investment demand for platinum and palladium should add to a
recovery in buying by industrial users -- primarily carmakers --
this year, analysts said.
"So far this year U.S.-based physically backed platinum ETFs
have attracted around $400 million from investors, and we expect
these investment flows to continue given how recently this fund
was started," said Natixis in a note on Thursday.
"We also expect automakers will be restocking in 2010 given
last year's production cuts when the car scrappage programmes
reduced inventory levels substantially," it added.
(Editing by James Jukwey)
