MARKETS-PRECIOUS (UPDATE 5)
* Dollar recovers earlier losses after U.S. trade data * Equity markets take on firmer tone but caution remains * India gold demand slips as prices rise; SPDR ETF unchanged
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 10 (Reuters) - Gold slipped 0.5 percent in Europe on Wednesday, giving up earlier gains, as the dollar recovered against the euro after the U.S. government reported a wider-than-expected trade deficit in December.
The precious metal rose as high as $1,082.10 in earlier trade as the prospects of an imminent rescue package for Greece lifted the euro.
Spot gold was bid at $1,072.95 an ounce at 1412 GMT, against $1,076.95 late in New York on Tuesday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $1.60 to $1,075.10 an ounce.
"Gold is tracking the euro/dollar tick by tick," said Deutsche Bank trader Michael Blumenroth. "You just have to make up your mind about currency moves, and then react to that."
"There is still good support at $1,045, which is the level India was buying gold last year, and below that at the moving average at $1,025," he added.
The dollar firmed against the euro, recovering earlier losses, after the U.S. government said the trade deficit grew more than expected in December.
The U.S. trade deficit widened to $40.2 billion, according to the Commerce Department. Wall Street analysts surveyed before the report had expected the trade deficit to narrow to $36 billion.
Dollar strength curbs gold's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Gold rose along with the euro earlier on Wednesday after German government coalition sources said bilateral financial aid could be provided for Greece.
Sources also said an agreement on the details of how Greece would be helped and by which countries could be finalised on the sidelines of an EU summit on Thursday.
The markets are also awaiting Federal Reserve Chairman Ben Bernanke's testimony before the House Financial Services Committee hearing on unwinding Federal Reserve liquidity programmes at 1500 GMT.
"The release of... Bernanke's speech on the Fed's strategy to cease its policy of extremely low interest rates will receive particular interest," said Commerzbank in a note.
OIL SLIPS
Among other commodities, oil gave up dollar-related gains made in early trade to slip back below $74 a barrel. Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation.
On the wider markets, world stocks rose and European shares were higher as sentiment improved on signs the European Union may arrange a bailout for troubled Greece.
On the physical side of the gold market, Indian demand for the precious metal tailed off as prices recovered, while holdings of the SPDR Gold Trust exchange-traded fund were unchanged.
Among other precious metals, silver was at $15.39 an ounce against $15.41, tracking losses in gold.
Holding's of the world's largest silver-backed ETF, New York's iShares Silver Trust, have risen nearly 46 tonnes this week, suggesting investment demand for the precious metal is strong.
Elsewhere platinum was at $1,501.50 an ounce against $1,502, and palladium at $413.50 against $415.
"Key near-term support is seen from seven-month trendlines in palladium and platinum at $386 and $1,468, respectively," Barclays Capital said in a note.
"Breaks here would likely prove to be the catalyst for the next leg of precious metal weakness." (Editing by Sue Thomas)
