* Briefly higher dollar, U.S. growth prospects hit gold
* SPDR gold ETF has biggest 1-day outflow since early Oct
(Updates with late prices, adds U.S. comment, changes byline,
adds NEW YORK to dateline)
By Carole Vaporean and Jan Harvey
NEW YORK/LONDON, Dec 23 (Reuters) - Gold pared early losses
of nearly 1 percent by the end of New York's holiday-shortened
week on Thursday as the euro rebounded, with analysts saying a
possible rise in inflation next year could send the metal
higher.
Gold touched one-week lows early, hit by a rising dollar
after a raft of robust U.S. economic data pointed to stronger
fourth-quarter growth than the prior three months' tepid pace.
Spot gold <XAU=> fell as low as $1,372.05 an ounce, but had
retraced some of those losses to trade at $1,378.85 by 16:05
p.m. EST (2105 GMT) against $1,384.55 late on Wednesday.
U.S. gold futures for February delivery <GCG1> lost $6.90,
or 0.5 percent, to finish at $1,380.50 an ounce on the COMEX
division of the NYMEX.
COMEX and NYMEX floor trade ended an hour early and will
remain closed on Friday for the Christmas holiday. CME Globex
and CME ClearPort will run on a normal schedule on Thursday and
close at 8:00 a.m. (1300 GMT) on Friday.
Earlier, a sliding euro hit gold futures after a raft of
robust readings on the U.S. economy gave an improved
fourth-quarter growth scenario. []
Improved U.S. economic prospects prompted some players to
exit gold as a safe-haven asset and as the dollar firmed.
New U.S. claims for jobless benefits dipped last week and
consumer spending increased in November for a fifth straight
month, reinforcing expectations of solid economic growth in the
fourth quarter. []
But gold drew support from the possibility of inflation
heating up if economic activity continues to strengthen.
"If the dollar sees strength from true and long-lasting
economic production and some austerity on the federal level, it
(gold) is likely to go lower, but I think that is highly
unlikely for next year," said Sean McGillivray, head of asset
allocation for Great Pacific Wealth Management in Oregon.
McGillivray sees a pick-up in inflation and risk-aversion
trades leading gold to $1,425 to $1,450 per ounce in the first
quarter.
He and others point to signs the U.S. stock market rally
has been running out of steam and fears of a sell-off there
could send some players back to gold as a safety play.
"As the U.S. debt becomes more and more of a focus, as it
has to at some point, there is going to be more uncertainty in
the U.S. dollar. That will drive people into other assets, and
gold will definitely be one of them," said Jeff Pritchard, an
analyst and broker at Altavest Worldwide Trading.
HEADING FOR WEEKLY RISE
Thursday's correction notwithstanding, gold is still
heading for its first weekly rise in three. Its haven appeal
rose after ratings agency Fitch said it may cut Greece's
foreign currency rating and Moody's threatened to downgrade
debt-ridden Portugal.
"The prospect of further downgrades had an impact on the
euro and (also) on gold," said Peter Fertig, a consultant at
Quantitative Commodity Research.
"This is probably calming down in the final few trading
days of this year, but it will remain a topic going into next
year. From that perspective, gold seems to be well supported."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For interactive graphics on the euro zone debt crisis:
http://r.reuters.com/hyb65p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Analysts say gold and the other precious metals could be in
for some hefty gains next year.
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD>, recorded its biggest one-day drop
since early October on Wednesday, with its holdings declining
just over 9 tonnes to 1,288.616 tonnes. []
The fund's holdings are up just over 2 tonnes since the end
of November, against a rise of nearly 16 tonnes in the same
period of last year.
Among other precious metals, platinum <XPT=> fell to
$1,712.74 in late New York business against $1,721.50 an ounce
previously, and palladium <XPD=> eased to $747.25 an ounce from
$748.25 at Wednesday's close.
Silver <XAG=> nudged up to $29.24 an ounce in late New York
trade, against $29.20 late on Wednesday.
Prices at 1:51 p.m. EST (1851 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCG1> 1380.50 -6.90 -0.5% 25.9%
US silver <SIH1> 29.328 -0.057 0.0% 74.1%
US platinum <PLF1> 1723.10 -7.80 -0.5% 17.1%
US palladium <PAH1> 758.10 2.95 0.4% 85.4%
Gold <XAU=> 1379.80 -4.75 -0.3% 25.9%
Silver <XAG=> 29.27 0.07 0.2% 73.8%
Platinum <XPT=> 1714.00 -7.50 -0.4% 17.0%
Palladium <XPD=> 750.72 2.47 0.3% 85.1%
Gold Fix <XAUFIX=> 1373.50 -10.50 -0.8% 24.4%
Silver Fix <XAGFIX=> 29.18 -17.00 -0.6% 71.7%
Platinum Fix <XPTFIX=> 1720.00 9.00 0.5% 17.3%
Palladium Fix <XPDFIX=> 752.00 2.00 0.3% 87.1%
(Editing by Dale Hudson)
