FRX: Gold firms as dollar retreats after U.S. data
* Dollar extends losses after third-quarter U.S. growth data
* Euro ticks up but euro zone debt concerns persist * IMF completes planned sale of 403.3 T of gold
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By Jan Harvey
LONDON, Dec 22 (Reuters) - Gold firmed in Europe on Wednesday, building on three straight sessions of gains, as the dollar extended losses after data showed U.S. growth was slightly stronger than expected in the third quarter.
Spot gold was bid at $1,388.10 an ounce at 1418 GMT, against $1,385.30 late in New York on Tuesday. U.S. gold futures for February delivery rose 50 cents to $1,389.30.
Simmering concerns over euro zone debt levels after recent warnings from credit rating agencies on some euro zone economies have supported haven demand for the metal, and prices were also underpinned by the IMF's announcement of the completion of the massive gold reserve sale it began a year ago.
But in thin pre-Christmas trade, gold has fallen largely back into step with its traditional inverse relationship with the dollar, which has been choppy this year as both assets have benefited from financial instability in the euro zone.
"To give a simplified explanation, imagine the gold price is completely static, then if the dollar rises by 1 percent, the dollar price should fall by 1 percent," Mitsubishi analyst Matthew Turner said.
"In a sense, it's what happens when nothing else is happening."
The dollar retreated after data from the U.S. Commerce Dept showed gross domestic product growth was revised up to an annualized rate of 2.6 percent from 2.5 percent in the third quarter.
U.S. Treasury prices pared losses after the data showed that U.S. economic growth was a touch higher than previously estimated, but below expectations, while U.S. stock futures trimmed gains.
The euro also rose, rebounding after hitting new lows on the Swiss franc and Australian dollar, after a news report that China was prepared to buy Portuguese sovereign debt.
Confidence in the single currency remains fragile, however, after a steady drip of grim ratings news. Moody's warned late last week that it might cut Portugal's credit rating, and Fitch later said the same thing about Greece.
IMF COMPLETES GOLD SALE
The IMF meanwhile announced it had completed its planned sale of 403.3 tonnes of bullion. Buyers included India, Mauritius, Sri Lanka and Bangladesh. Swiss bank UBS said in a note that without IMF selling, it expects official sector buying to accelerate next year.
"A sharp increase in dollar reserves in recent years has led to gold's share in total reserves declining at many central banks, such as the Reserve Bank of India, prompting gold purchases as a means of rebalancing gold's share in total reserves," said Natalie Dempster, director of government affairs at the World Gold Council.
"Other central banks bought their own local mine production this year or acquired gold on the open market for the same reason, dollar diversification or due to rising risks on other commonly held reserve assets, such as European sovereign debt."
Elsewhere, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, eased to 1,298.029 tonnes by Dec 21 from 1,298.940 tonnes the previous day, data from the fund showed.
Among other precious metals, silver was bid at $29.30 an ounce against $29.32, platinum was at $1,724.50 an ounce against $1,719.24, while palladium was at $753.97 against $751.75. (Editing by Alison Birrane)
