* Gold slumps 2 percent as India raises rates
* Gold has biggest one-day percentage loss since Feb. 4
* Investors more risk averse, oil prices also tumble
* Coming up: U.S. existing home sales on Tuesday
(Recasts, updates market activity, closing prices, adds second
dateline, byline)
By Frank Tang
NEW YORK, March 19 (Reuters) - Gold fell toward $1,100 an
ounce on Friday, losing nearly 2 percent after an interest rate
hike in top gold consumer India, and investors cashed in gains
from earlier this week ahead of the weekend.
Spot gold's 1.7 percent decline on Friday was the biggest
one-day percentage loss since Feb. 4, when it had lost 4.2
percent.
The precious metal ended the week nearly unchanged. It rose
earlier in the week despite a rising dollar, due to fiscal
worries about Greece and uncertainty about currencies.
But bullion retreated on Friday as the dollar surged
against the euro on nagging worries about Greece and as India's
interest rate hike created economic uncertainty about a country
whose gold consumption leads the world.
"The euro went back towards $1.35, which was the main
trigger," said Michael Blumenroth, a senior trader at Deutsche
Bank. "The market was very quiet before that, so I think it was
taken by surprise."
He said news that India's central bank had raised key
policy rates by 25 basis points had also probably hit prices.
"A rate hike in any part of the world is bad for the gold
market because (it affects) the opportunity cost of holding
gold," he said.
Spot gold <XAU=> was at $1,106.35 an ounce at 2:50 p.m. EDT
(1850 GMT), against $1,125.45 late in New York on Thursday.
Earlier in the session, bullion traded as low as $1,100.95.
Gold ended the week slightly higher compared with a close of
$1,102.05 on March 12.
U.S. gold futures for April delivery <GCJ0> on the COMEX
division of the NYMEX settled down $19.90, or 1.8 percent, at
$1,107.60 an ounce.
The euro fell to its lowest in more than two weeks against
the U.S. dollar on Friday, also pressured by weakness in
equities. The Dow Jones industrial average is down 0.5 percent,
on track to snap an eight-session winning streak. []
The single currency has fallen 5.5 percent versus the
dollar this year as investors fret over the outlook for Greece.
The country said on Thursday it cannot achieve promised deficit
cuts if its borrowing costs remain so high, and may have to
call in the IMF. []
OIL TUMBLES, INDIA HIKES RATE
The Reserve Bank of India meanwhile increased the repo
rate, the rate at which it lends to banks, to 5.00 percent and
the reverse repo rate, the rate which it absorbs funds from the
system, to 3.50 percent with immediate effect. []
Commerzbank analyst Eugen Weinberg said as India is the
world's largest gold buyer, concerns of lower imports and
demand from the country would weigh on interest in gold.
Among other commodities, oil fell 2 percent to hold just
above $80 a barrel on Friday as the dollar strengthened. []
Gold tends to track crude prices, as the metal can be
bought as a hedge against oil-led inflation.
Among other precious metals, silver <XAG=> was at $16.96 an
ounce against $17.35.
Among other precious metals, platinum <XPT=> was at $1,603
an ounce against $1,627, while palladium <XPD=> was at $466.50
an ounce against $475 an ounce.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1107.60 -19.9 -1.8 1096.20 1.0
US silver <SIK0> 17.032 -0.390 -2.2 16.845 1.1
US platinum <PLJ0> 1608.60 -22.40 -1.4 1471.00 9.4
US palladium <PAM0> 468.50 -10.25 -2.1 408.85 14.6
Prices at 3:02 p.m. EDT (1902 GMT)
Gold <XAU=> 1107.05 -18.40 -1.6 1096.35 1.0
Silver <XAG=> 16.95 -0.40 -2.3 16.84 0.7
Platinum <XPT=> 1603.00 -24.00 -1.5 1465.50 9.4
Palladium <XPD=> 468.50 -6.500 -1.4 405.50 15.5
Gold Fix <XAUFIX=> 1104.25 0.25 0.0 1104 0.0
Silver Fix <XAGFIX=> 17.02 -29.00 -1.7 16.99 0.2
Platinum Fix <XPTFIX=> 1616.00 8.00 0.5 1466 10.2
Palladium Fix<XPDFIX=> 463.00 5.00 1.1 402 15.2
(Additional reporting by Jan Harvey in London; Editing by
David Gregorio)
