* Dollar rises versus euro on Greece debt concerns
* Oil prices slide $2 a barrel to below $78/bbl
* Euro-priced gold bucks trend to edge higher
(Updates prices)
By Jan Harvey
LONDON, Feb 25 (Reuters) - Gold prices fell in Europe on
Thursday as the euro slipped back towards a nine-month low
versus the dollar, pressured by persistent worries about
Greece's fiscal health.
Both currencies fell versus the yen as fears over Greece's
debt crisis and an unexpected rise in U.S. jobless claims
boosted safe-haven flows into the Japanese currency. []
Spot gold <XAU=> was bid at $1,094.70 an ounce at 1635 GMT,
against $1,097.25 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 $1.60 to $1,095.60 an ounce.
The U.S. unit's rise versus the euro has made dollar-priced
gold more expensive for holders of the single currency.
Euro-priced gold <XAUEUR=R>, however, rose to 811.66 euros an
ounce, against 809.95 euros an ounce late on Wednesday.
"There are two diverging effects at work here," said Credit
Suisse research analyst Tobias Merath. "First there is the
stronger dollar, which is negative, but on the other hand there
are also still fairly low government bond yields... and that is
positive."
Interest rates represent the opportunity cost of holding
gold, which does not bear interest.
"At the current yield level, gold looks attractive," Merath
added. "What we also see particularly in the euro is that when
benchmark bonds turned down, gold also became attractive for
euro-based investors."
The dollar pared gains versus the euro <EUR=> after U.S.
data showed first-time filings for unemployment benefits
unexpectedly rose in the latest week, but held onto the bulk of
its gains. []
The euro declined against other currencies too, hitting a
one-year low against the yen, as worries over a possible
downgrade of Greece's sovereign debt triggered fresh worries
about the fiscal health of smaller euro zone economies.
Ratings agency Standard and Poor's said late on Wednesday it
may cut Greece's BBB+ rating by one or two notches within a
month. []
Fears over economic instability and the stronger dollar also
weighed on other commodities, with oil prices sliding more than
$2 to below $78 a barrel and industrial metals also declining.
[] []
INVESTOR SENTIMENT
Investment interest in gold was relatively lacklustre. The
world's largest gold exchange-traded fund, New York's SPDR Gold
Trust <GLD>, reported no change in its holdings on Wednesday.
The fund has seen outflows of 26.7 tonnes so far this year,
against inflows of 248.75 tonnes in the same period of 2009.
"Investor sentiment appears to have turned against gold
temporarily, and while we are positive for the medium to longer
term, further short-term losses appear likely," HSBC said in a
note.
The World Gold Council told a news conference in Beijing
that gold demand from the top two global consumers, India and
China, had started strongly in 2010. []
Indian jewellers were buying regularly and tighter Chinese
monetary policy was not affecting purchases, it said.
India's February gold imports are expected to have risen to
30-35 tonnes, according to the head of Bombay Bullion
Association Suresh Hundia, from 7.9 tonnes in February 2009.
[]
Elsewhere, industry insiders told Reuters scrap gold volumes
in the Middle East this year are expected to be lower than in
2009 as prices ease from peak levels. []
Among other precious metals, silver <XAG=> was at $15.87 an
ounce versus $15.96. Platinum <XPT=> was at $1,510.50 an ounce
versus $1,505, and palladium <XPD=> at $419.50 versus $420.
(Editing by James Jukwey)
