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Gold steadies off four-month high as dollar firms

A pawn shop worker prepares jewellery and luxury watch for photographs at Easy Money pawn shop in Bangkok, August 27, 2013. REUTERS/Athit Perawongmetha/Files

By Jan Harvey

LONDON (Reuters) - Gold prices steadied on Thursday off the previous day's four-month high under pressure from a firmer dollar, while buyers of coins, bullion and jewellery in Asian markets held off in expectation of a further price drop.

The dollar held near a two-week high against a basket of major currencies as heightening tensions in Ukraine helped to support safe-haven demand for the U.S. unit.

Geopolitical concerns and an unexpectedly upbeat report on U.S. new home sales on Thursday helped the dollar to its biggest one-day rise in about a month, prompting gold selling after the metal hit its highest since October 30 in Asian trading hours.

Spot gold was at $1,331.39 an ounce at 1213 GMT, little changed from $1,330.19 late on Thursday, but well off that session's high of $1,345.35 an ounce.

"Given the lack of serious physical demand, bullion remains at the mercy of investor and dollar sentiment," VTB Capital analyst Andrey Kryuchenkov said. "The inverse correlation to the U.S. dollar is at highs for the year.

"The market had run ahead of itself and players will be taking profits on the latest run higher ahead of important macro numbers next week."

Analysts are awaiting U.S. jobless claims data at 1330 GMT as a precursor to next Friday's U.S. non-farm payrolls report for Febrary, a key indicator of the health of the world's biggest economy.

A spate of below-consensus U.S. data has curbed expectations that the Federal Reserve will step up tapering of its bullion-friendly monthly bond-buying programme, which prompted much of last year's fall in gold prices.

Gold has risen more than 10 percent this year on uncertainty over the pace of the U.S. economic recovery, worries about growth in China and renewed interest in bullion-backed exchange-traded funds.

U.S. gold futures for April delivery were up $4.90 an ounce at $1,332.90.


In the physical market, premiums for gold bars in Singapore slipped to as low as 80 cents to the spot London prices from a high of $1.50 last week after a recent increase in prices spurred sales of scrap.

"We are quoting premiums at 80 cents to $1 now because the market is flooded with supply, given the low demand," one Singapore dealer said.

Silver was up 0.6 percent at $21.33 an ounce, recovering some lost ground after falling 2.8 percent the previous day, its biggest price drop in a month.

"That silver struggled to break convincingly through $22 was ... likely to frustrate investors," UBS said in a note.

"The silver market had tried to overcome this level all of last week, and after a couple more failed attempts this week, the urge to secure profits took over and prices finally gave in to the downside."

Spot platinum was at $1,432.75 an ounce, up 0.6 percent, while spot palladium edged 0.3 percent higher to $731.25 an ounce.

The chief executive of major platinum producer Impala Platinum (IMPJ.J) said talks between the world's top three platinum mining companies and South Africa's striking AMCU union will resume on Friday in an effort to end a five-week stoppage over wages.

(Additional reporting by Lewa Pardomuan in Singapore; Editing by William Hardy and David Goodman)