RTRS:PRECIOUS-Gold retreats from 6-1/2 month high as dollar firms
* Euro, stock markets hurt be worries over European growth
* Monetary easing measures support gold near highs
* Gold's ratio to silver eases a touch (Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Sept 24 (Reuters) - Gold prices eased nearly 1 percent on Monday, pulling back from the previous session's 6-1/2 month high, as the dollar rose and assets seen as higher risk, like stocks, the euro and other commodities like crude oil retreated.
The metal remained underpinned however, by expectations for longer-term price strength, after central banks including the Federal Reserve and European Central Bank announced fresh rounds of monetary policy easing earlier this month.
Spot gold was down 0.8 percent at $1,758.51 an ounce at 0940 GMT, while U.S. gold futures for December delivery were down $16.80 an ounce at $1,761.20. On Friday gold hit a peak of $1,787.20, its highest since Feb. 29.
The Fed this month launched a third round of quantitative easing - printing money to buy bonds - under which it will purchase $40 billion a month in mortgage-backed debt until the outlook for the labour market improves substantially.
Further monetary easing is likely to maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom, and to undermine the dollar, boost liquidity, and stoke fears over inflation further down the line.
However, a stronger dollar and caution among investors over the uncertain outlook for Europe has put the brakes on gold.
"Part of the issue is the lack of obvious catalysts in the near term to take gold prices higher," Deutsche Bank analyst Daniel Brebner said. "We have some continuing risk issues in Europe, U.S. manufacturing data continues to be for the most part disappointing, and Chinese growth continues to be a real risk as well in the near term."
"There are a number of low growth concerns which could underpin the dollar, and keep gold somewhat moribund near term."
"But I do think we will likely see over the next quarter or so greater policy action both in Europe and China to support growth within those regions," he added. "The likelihood is for further accommodative monetary policy in both regions, and that could keep the gold price moving higher. We think we will see $2,000-plus gold prices in the first half of next year."
European shares and the euro followed a broad range of riskier assets lower on Monday as investors refocused attention from central bank stimulus schemes to weak economic fundamentals and the euro zone's yet-to-be-resolved debt crisis.
Bund futures rose after a worse-than-expected German business sentiment survey, and were expected to gain further in the near term as Spain's reluctance to seek a bailout unnerved investors.
GOLD ETF HOLDINGS APPROACH RECORD
Holdings of gold-backed exchange-traded funds tracked by Reuters rose by nearly 330,000 ounces on Friday to 73.748 million ounces, climbing back towards last week's record high at 73.681 million ounces.
The bulk of inflows were seen into the world's largest gold ETF, New York's SPDR Gold Trust. ETFs, which issue securities backed by physical metal, have proved a popular way to invest in gold in recent years.
Meanwhile, demand in major consumer India picked up, as a drop in local gold prices to a three-week low on Monday prompted a wave of buying, while an upcoming week-long holiday in China has generated some physical gold buying interest. ]
"Buying interest is much higher than last week, mostly because the rupee has appreciated substantially," one Mumbai-based dealer said, adding that physical demand might be sustained if prices - at 31,281 rupees per 10 grams earlier on Monday - held below 32,000 rupees.
Among other precious metals, silver was down 1.7 percent at $33.84 an ounce.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, recovered from last week's 5-1/2 month low at 50.9 to 51.9 on Monday, after silver underperformed the yellow metal late last week.
Technical analysts at ScotiaMocatta, who study past price moves for clues as to the future direction of prices, said they expect the ratio to continue falling. "While the ratio has been consolidating the past week, the larger trend remains bearish, with an initial target at the March low of 47.67," it said.
Spot platinum was down 2.1 percent at $1,603.10 an ounce, while spot palladium was down 3.8 percent at $642.97 an ounce.
Industrial unrest in major platinum producer South Africa simmered down a touch during a national holiday in the republic, after weeks of sometimes violent protest killed 45 and sent the metal to multi-month highs. Tensions remain elevated, however. (Reporting by Jan Harvey; Editing by Alison Birrane)
