RTRS: Gold drops on euro uncertainty, commods weakness
* Germany, France clash on key issues before EU summit
* Consolidation resumes, open interest in US futures falls
* Physical demand in India wanes due to weak rupee
(New details throughout; changes byline, dateline, previously
LONDON)
By Frank Tang
NEW YORK, Oct 18 (Reuters) - Gold fell on Thursday as
commodity weakness and uncertainty over the commitment of
Germany and France to battle the euro zone debt crisis prompted
the bullion market to consolidate gains after its recent rally.
The metal declined as the dollar rose against the euro and
oil dropped after Berlin and Paris, Europe's central powers,
clashed over greater EU control of national budgets and other
issues before a summit of the bloc's leaders.
Weaker sentiment also weighed on gold after the number of
Americans filing new claims for jobless benefits spiked last
week. Earlier in the day, data showed China's economy slowed for
a seventh straight quarter, even though other numbers pointed to
a mild year-end rebound.
The gold market appears to have factored in optimism related
to the U.S. Federal Reserve's monetary stimulus announced in
September, analysts said. Gold was still $150 per ounce higher
than its mid-August level despite a recent pullback.
"Without any other major drivers, the precious metals will
continue to show weakness and test the downside" because the
latest buyers might lack patience to wait for another bull run,
said Carlos Perez-Santalla, a broker at brokerage PVM Futures.
Spot gold fell 0.3 percent on the day to $1,744.70 an
ounce by 11:18 a.m. EDT (1518 GMT).
U.S. COMEX gold futures for December delivery slipped
$6.90 an ounce to $1,746, with trading volume set to finish well
below average, preliminary Reuters data showed.
Open interest in gold futures fell 3 percent this week, a
sign funds were liquidating positions and switching to
better-performing assets such as equities, analysts said.
Also pressuring bullion was a bearish call on oil prices by
Goldman Sachs, one of the biggest banks in commodity trading.
The firm has called an end to the oil price super-cycle,
reversing years of bullish forecasts, citing a rise in U.S. and
Canadian unconventional oil supplies.
Gold dipped below $1,730 earlier in the week under the
pressure of uncertainty over a bailout plan for Spain and an
improvement in U.S. economic data, which triggered concerns
about the extent of the latest stimulus measures.
PHYSICAL DEMAND LAGGING
Analysts said physical demand was weaker than expected for
the time of year, when festivals in India and the build-up to
Christmas tend to ramp up physical buying.
Demand from gold importers in India appeared to wane on
Thursday as a weaker rupee drove up domestic prices in the
world's largest gold buyer for the third session in a row.
Among other precious metals, silver fell 0.5 percent
to $33, tracking gold. Platinum dropped 0.7 percent to
$1,647.99, while palladium was up 0.1 percent at $649.50.
Prices at 11:18 a.m. EDT (1518 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold 1746.00 -6.90 -0.4% 11.4%
US silver 33.050 -0.182 -0.6% 18.4%
US platinum 1655.80 -14.70 -0.9% 18.3%
US palladium 651.50 -1.90 -0.3% -0.7%
