* Dollar firms ahead of G20 meeting in South Korea
* Indian gold demand rises as prices slip from record highs
* Coming up: G20 meeting in South Korea
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 22 (Reuters) - Gold hit its lowest in more than
two weeks in Europe on Friday as the dollar strengthened amid
caution ahead of this weekend's G20 meeting, at which officials
will seek ways to tackle currency imbalances.
Spot gold <XAU=> was bid at $1,318.95 an ounce at 0935 GMT,
against $1,323.60 late in New York on Thursday, having earlier
fallen as low as $1,315.09. U.S. gold futures for December
delivery <GCZ0> fell $6.40 an ounce to $1,319.20.
Spot prices rallied sharply to a record $1,387.10 an ounce
late last week but have struggled to maintain traction as the
dollar rebounded from lows amid fears expected U.S. monetary
easing had been too heavily priced into the market.
"The main pressure is the dollar, but also profit-taking,"
said Commerzbank analyst Eugen Weinberg. "There has been so much
hot money flowing into the markets over recent weeks that it is
not surprising to see profit-taking on the current weakness."
The dollar was on track for its first weekly rise in six
weeks versus a basket of major currencies <.DXY>. Traders are
awaiting this weekend's G20 meet in South Korea for direction,
though significant action is not expected. []
[]
The dollar's strength has led to a 3.6 percent drop this
week in gold, now heading for a decline roughly equivalent to
its last big fall in mid-July. Pressure from technical factors
is being brought to bear, analysts said.
"In all these markets, there are chart patterns which form
as the market moves on the way up and it triggers plays and
stops on the way down," said ANZ Bank analyst Peter Hillyard.
"Some of the minor chart points have been breached and this
is causing the market to come back," he added. "But I'm not
surprised. It has had a fabulous run-up and a correction back
$70 is nothing, really."
Good physical demand from traditional bullion-buying centres
such as India is strengthening as prices descend, he added,
which is likely to support the market above $1,300 an ounce.
"Physical demand is certainly a feature, but it isn't enough
yet to mop up that selling," he said. "Investor selling is
always going to beat physical demand, but often what it
(physical demand) does is herald where the market is going to go
next."
INDIAN BUYING PICKS UP
Dealers in India reported they were continuing to stock up
for forthcoming festivals as prices extended losses. "I have
many advanced orders at $1,319 or below," said one dealer with a
bullion dealing private bank. []
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD>, saw a further drop in its holdings
on Thursday, however. Gold held by the fund dropped 0.9 tonnes,
its 11th session of outflows in 15. []
On the supply side of the market, African Barrick Gold
<ABGL.L>, which was spun off from the top world gold miner
Barrick Gold <ABX.TO> earlier this year, reported
weaker-than-expected production for the third quarter.
[]
Among other precious metals, silver <XAG=> was bid at $22.96
an ounce against $23.18 and was heading for its biggest weekly
loss since early July as it followed gold prices lower.
The ratio of gold to silver -- the number of ounces of
silver needed to buy an ounce of gold -- rebounded from its
lowest in more than two years to reach a 10-day high on Friday
as silver underperformed gold in a falling market.
Elsewhere platinum <XPT=> was at $1,665.19 an ounce against
$1,665.95, while palladium <XPD=> was at $581.81 versus $581.53.
(Additional reporting by Elizabeth Fullerton; Editing by
Jane Baird)
