* Dubai's $10 bln bailout weighs on dollar
* Traders eye last Fed policy meeting of 2009
* London, New York ETF holdings sank last week
(Recasts with U.S. close, adds comment, adds NEW YORK to
the dateline)
By Carole Vaporean and Jan Harvey
NEW YORK/LONDON, Dec 14 (Reuters) - Gold prices made a
moderate advance on Monday after news that Abu Dhabi agreed to
back some of Dubai's debt pressured the dollar and lifted
higher-yielding currencies such as the euro.
Spot gold <XAU=> was bid at $1,124.50 an ounce by 3:55 p.m.
EST (2055 GMT), against $1,113.85 late in New York on Friday.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange finished $3.90
higher at $1,123.80 an ounce.
A decline in the dollar tends to lift assets like dollar
denominated gold in markets outside the U.S.
But participants added that gold is awaiting fresh
direction from the wider markets after posting a sharp fall
last week, which depressed prices nearly 10 percent from the
record $1,226.10 an ounce they hit in early December.
"The dollar decline helped stem the selling pressure. But
the jury is still out on where the next near-term move will be
for gold. For now, it's nap time," said George Nickas, metals
broker at FC Stone in New York.
The euro edged up against the dollar as Abu Dhabi's
decision to throw neighboring emirate Dubai a $10 billion
lifeline to repay debts slowed safe-haven buying that boosted
the U.S. currency last week. []
Abu Dhabi's move prompted investors to sell the dollar and
buy stocks on improved risk appetite, even as lingering
concerns over debt woes outside Dubai capped euro gains.
"Stock markets have recovered and that indicates that at
least a little more risk taking is coming back into the
market," said Peter Fertig, a consultant at Germany's
Quantitative Commodity Research.
"That is usually positive for gold via the U.S. dollar,
because more risk taking means investors are shifting out of
the safe-haven dollar into risky assets."
FED EYED
Traders are awaiting comments from the Federal Reserve on
the state of the U.S. economy later this week. The Fed is due
to complete its final policy meeting of the year on Wednesday.
The U.S. central bank is likely to keep interest rates
unchanged near zero, but the focus will be on the accompanying
statement and whether the Fed adds to recent hints that rates
will remain depressed for the foreseeable future.
A change in investment trends also unsettled some analysts.
Holdings of the world's largest gold exchange-traded fund fell
13.7 tonnes in the week to Friday, reflecting a 4 percent dip
in the price of spot gold in the same period. []
London's ETF Securities said holdings of its gold-backed
exchange-traded products fell just over 38,000 ounces or 0.5
percent last week, while Zurich Cantonal Bank's gold ETF saw an
outflow of 64,635 ounces or 1.3 percent.
"A recent switch in investment activity to futures markets
as purchasing of exchange-traded product buying has slowed ...
(suggesting) that the risk of liquidation has grown since
futures holders tend to be less committed than ETP buyers,"
Barclays Capital said in a weekly note.
Noncommercial net long U.S. gold futures positions hit
record highs recently but a weekly report by the U.S. Commodity
Futures Trading Commission showed they fell to 254,429 lots in
the week to Dec. 8 from 259,064 lots. []
Silver <XAG=> was bid at $17.34 an ounce in late New York
business against $17.11 previously, tracking gains in gold.
Platinum <XPT=> rose to $1,445.50 an ounce against $1,426,
while palladium <XPD=> was at $364 against $357.50.
"With the gold:silver ratio at 65...silver remains a
compelling buy at these levels and will likely be the surprise
outperformer in 2010, as it was in 2009," bullion dealer
GoldCore said in a note.
(Editing by Marguerita Choy)
