* Euro slips versus the dollar after Trichet speaks
* ECB, BoE leave rates on hold as expected
* SPDR gold ETF reports fresh 1.6-tonne outflow
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 4 (Reuters) - Gold tumbled 3.8 percent to a
three-month low in Europe on Thursday as the euro hit its
weakest in seven months against the dollar, pushing the precious
metal through key technical support levels.
Other precious metals also fell, with silver sliding more
than 5 percent to its lowest since September, platinum dropping
more than 3 percent and palladium down nearly 4 percent.
Spot gold <XAU=> fell to a low of $1,066.30 an ounce and was
bid at $1,074.30 an ounce at 1538 GMT, against $1,108.85 late in
New York on Wednesday.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell $36.20 to
$1,075.20.
VTB Capital analyst Andrey Kryuchenkov said the technical
picture looked weak for gold, with the metal suffering from a
loss of confidence after it failed to sustain gains above $1,120
an ounce earlier in the week.
"The market was trying to go through a certain level around
$1,117-1,120, and that is exactly where the December downtrend
was touching the market," he said.
"Yes, it is the dollar, and the fact that the euro is coming
off, but also we are coming back to the bottom of the range."
The euro hit a seven-month low against the dollar amid
concerns over the fiscal health of some euro zone countries,
with ECB chief Jean-Claude Trichet predicting many members will
have large, sharply rising fiscal imbalances. []
Strength in the U.S. unit curbs gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
Speaking at a press conference after the ECB left its
benchmark lending rate unchanged at a record low 1.0 percent,
Trichet said high public debt and deficit would place additional
burdens on monetary policy. []
Earlier the Bank of England announced no increase to its 200
billion pound ($317.5 billion) asset-buying programme after its
monetary policy meeting, and left UK interest rates at a record
low of 0.5 percent. []
VULNERABLE
From a technical point of view, gold still looks vulnerable,
analysts said. "The market looks very heavy here," said Peter
Hillyard, head of metal sales at ANZ Banking Group.
"The chart reveals a yawning chasm that could take prices
back to $1,010.... it may start slowly but gain momentum as it
comes lower," he added. "I think it will fall on the cumulative
effect of stops being triggered."
Among other commodities, oil prices fell more than $2 a
barrel as rising crude inventories and higher U.S. unemployment
figures dampened expectations for stronger demand. Gold is
sometimes bought as a hedge against oil-led inflation. []
On the wider markets, European shares fell more than 2
percent on worries about peripheral euro zone economies, while
U.S. stocks tumbled after data showed new applications for
jobless benefits rose unexpectedly last week. [] []
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD> reported its first outflow this
month on Wednesday. Its holdings declined 1.6 tonnes that day,
after falling 21.7 tonnes in January. []
Wholesale gold buying in India, historically the world's
biggest gold consumer, remained dull on Thursday afternoon as
traders awaited a further fall in prices. []
Elsewhere silver <XAG=> touched a low of $15.48, tracking
losses of gold, and was later at $15.60 an ounce against $16.34.
Platinum <XPT=> was at $1,524 an ounce versus $1,572.50, and
palladium <XPD=> at $417.50 versus $434.50.
(Editing by Anthony Barker)
