* Euro retreats as ECB holds interest rates at record lows
* Single currency extends losses after U.S. home sales data
* Coming up: U.S. non-farm payrolls data due on Friday
(Releads, updates prices)
By Jan Harvey
LONDON, March 4 (Reuters) - Gold fell 1.2 percent as the
euro declined further against the dollar after U.S. home sales
data, extending losses made after the European Central Bank
reinforced the view that euro zone interest rates will stay low.
Speaking at a press conference after the ECB opted to leave
rates at a record low 1.0 percent, the bank's president
Jean-Claude Trichet was seen to reiterate that no hike in euro
zone rates is imminent. []
Spot gold <XAU=> was bid at $1,128.50 an ounce at 1551 GMT
against $1,139.35 late in New York on Wednesday, having earlier
slipped as low as $1,125.70.
U.S. gold futures for April delivery <GCJ0> on the COMEX
division of the New York Mercantile Exchange fell $14.00 to
$1,129.30 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.
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 TURN LOWER
European shares turned lower, giving up gains they made
after data showed the number of U.S. workers filing new
applications for unemployment insurance fell last week. []
U.S. stocks also turned negative, pulled lower by energy
shares as the price of oil fell nearly $1 a barrel. []
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. []
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. []
Silver <XAG=> was at $17.13 an ounce versus $17.17, platinum
<XPT=> was at $1,568.50 an ounce versus $1,575.50, and palladium
<XPD=> at $453 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 Sue Thomas)
