RTRS:PRECIOUS-Gold reverses gains on weak euro, falls to 3-week low
* Gold drops to lowest since April 23
* India's buying muted after new restrictions
* Gold's target of $1,395 resumed -technicals
* Coming up: U.S. industrial output; 1315 GMT
(Recasts, adds Germany, France data, updates prices)
By A. Ananthalakshmi
SINGAPORE, May 15 (Reuters) - Gold hit a three-week low on
Wednesday, stretching its losses into a fifth straight session,
as the euro weakened on disappointing European growth numbers
and firm equities lured away investors.
Gold had risen earlier in the day as outflows from
exchange-traded funds halted, but reversed direction after the
euro slid to a six-week low against the dollar on data showing
Germany grew by a weaker-than-expected 0.1 percent in the first
quarter and France slipped into recession.
Bullion's safe-haven appeal has also been dented by U.S.
equities at record highs, signs of an improving U.S. economy and
fears of a slowdown in demand from top consumer India.
Gold was down $15.8 at $1,409.59 an ounce by 0814
GMT, after swinging between a high of $1,430.24 and the
three-week low of $1,408.24. U.S. gold futures for June
dropped about 1 percent to $1,408.20 an ounce.
While spot gold has recovered about 7 percent from a
two-year low plumbed in mid-April, prices are still down more
than 14 percent for the year, on track to snap a 12-year winning
run.
"I think what the market is concerned about is ETF
outflows," said Dominic Schnider, an analyst at UBS Wealth
Management. "I wouldn't be surprised if we touch $1,405 an ounce
in a short period of time. I would assume that it would help
revive some physical demand," he said.
The holdings of the SPDR Gold Trust, the largest
gold-backed ETF, were unchanged at 33.8 million ounces on
Monday, after having fallen almost daily.
But the holdings were still within sight of their lowest
level since March 2009, hit this month after funds cut exposure
to bullion following its historic April fall.
Gold prices were also pressured as buying in India came to a
halt after the central bank limited imports following a surge in
buying last month that pushed up the trade deficit.
India's gold and silver imports surged 138 percent in April
on the year as customers exploited the lower prices.
But India's import curbs are having only a small impact on
spot gold prices, a dealer in Hong Kong said.
Premiums for gold bars in Hong Kong were at $3 to $4 an
ounce, the dealer added, compared with $3 last week. Hong Kong
is China's main source for gold imports.
Gold hit a low of $1,321.35 in April after a break below the
key psychological level of $1,500 ignited selling and Cyprus'
plan to sell excess gold reserves prompted speculation other
indebted euro zone countries could follow.
But Portugal will not replicate the Cyprus deal, Bank of
Portugal Governor Carlos Costa said.
PRECIOUS METALS PRICES 0721 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1411.76 -13.63 -0.96 -15.69
Spot Silver 23.00 -0.36 -1.54 -24.04
Spot Platinum 1489.74 -6.76 -0.45 -2.95
Spot Palladium 716.25 -10.25 -1.41 3.50
COMEX GOLD JUN3 1410.80 -13.70 -0.96 -15.81 33937
COMEX SILVER JUL3 22.97 -0.41 -1.77 -24.03 9606
Euro/Dollar 1.2894
Dollar/Yen 102.50
COMEX gold and silver contracts show the most active months
