* Dollar strengthens to one-month high versus the euro
* European shares up after GE, Citi, though Wall St stumbles
* SPDR gold ETF sees biggest outflow since late October
(Updates prices, adds comment)
By Jan Harvey
LONDON, April 17 (Reuters) - Gold fell on Friday, extending
the previous session's near 2 percent losses, as the dollar rose
to a one-month high against the euro and stocks firmed in
Europe, denting the metal's appeal as an alternative investment.
Analysts said the largest decline in holdings of the world's
main gold exchange-traded fund, the SPDR Gold Trust <GLD>, in
six months may show investors' interest in the metal is waning.
Spot gold <XAU=> was bid at $867.65 an ounce at 1509 GMT
against $874.55 late in New York on Thursday. U.S. gold futures
for April delivery <GCJ9> on the COMEX division of the New York
Mercantile Exchange fell $11.50 to $867.80 an ounce.
"The ETFs ran out of steam some time ago, so in my mind, it
was a question of when, rather than if we would come lower,
especially as there appears to be a degree of optimisim
surrounding economic recovery," said Simon Weeks, director of
precious metals at the Bank of Nova Scotia.
"There has been more liquidation today and although
traditional physical (demand) has picked up, it is not enough to
do anything other than smooth the impact of the selling."
Holdings of the SPDR ETF fell by the most since Oct. 23 on
Thursday. The trust's gold fell 8.25 tonnes to 1,119.43 tonnes
from previous record levels. []
SPDR's holdings have surged by 75 percent over the last 12
months. Analysts fear significant selling from the fund -- the
world's sixth largest gold holder behind Italy -- could
precipitate a sharp drop in prices.
Societe Generale analyst David Wilson said the fall was
unsurprising, however. "A lot of the flow into the gold funds
has been taking the view of gold as a safe haven," he said.
"But as other asset classes begin to become attractive, it
makes perfect sense that you are seeing money being withdrawn
from the gold funds to be put into other assets."
On the currency markets, the dollar rose to a one-month high
versus the euro after the head of the European Central Bank
failed to dispel uncertainty over the bank's policy. []
A stronger dollar typically weighs on gold, which is often
bought as an alternative investment to the currency.
Equities strengthened in Europe on Friday, adding to
pressure on gold after better-than-expected results from General
Electric <GE.N> and Citigroup <C.N>. Wall Street, however,
declined. []
AKSHAYA TRITYA
On the demand side, gold buying in India, the world's
largest bullion buyer, has ticked up as prices fell, and ahead
of the Hindu festival Akshaya Tritya on April 27.
A dealer at a private bank in Mumbai said all banks were now
importing gold for customers. Demand for the metal in India fell
sharply last year as prices rose.
India's gold imports in the first 15 days of April were 10
tonnes as falling prices revived demand after very few imports
in the previous two months, the head of Bombay Bullion
Association (BBA) said on Thursday. []
Among other precious metals, spot platinum <XPT=> was bid at
$1,206.50 an ounce against $1,201.50, while spot palladium
<XPD=> was bid at $231 an ounce, flat from the previous day.
Swiss bank UBS raised its 2009 price view for platinum to
$1,100 an ounce from $1,050 previously, and its 2010 forecast
for the precious metal to $1,175 an ounce from $1,100.
Rhodium <RHOD-LON> climbed 30 percent this week as hopes the
downturn in the automotive sector is bottoming out lifted
interest in all the platinum group metals, which are a key
component in autocatalyst manufacture. []
Ruthenium <RUTH-LON> also rose 7 percent to $75 an ounce
from $70. Silver <XAG=> was at $11.93 an ounce against $12.21.
(Editing by William Hardy)
