PRECIOUS-Gold trades flat, euro jitters help recoup losses

* Gold recoups losses on euro zone jitters, slowdown worry
* Hedge fund manager Paulson cuts bullion holdings
* Coming up: U.S. consumer prices Wednesday

By Frank Tang and Harpreet Bhal
NEW YORK/LONDON, Nov 15 (Reuters) - Gold traded flat on
Tuesday, recouping initial losses, fueled by worries over a
euro zone economic slowdown and fears that France could be
sucked into its spiraling debt crisis.
Bullion largely ignored news billionaire financier John
Paulson slashed a third of its ETF bullion holdings in the
third quarter. Analysts said Paulson's move was not a sign that
hedge fund managers were abandoning an upbeat view on gold amid
global economic uncertainty.
"We do see very active physical and safe-haven buying on
dips. Even though we do see pressure from a stronger dollar,
dips are seen as buying opportunity and key support levels have
held," said David Meger, director of metals trading of futures
broker Vision Financial Markets.
Some safe-haven buying lifted gold after euro zone economy
posted tepid growth in the third quarter, and a think-tank
report said triple-A rated France should also be "ringing euro
zone alarm bells" as it could not make rapid adjustments to its
economy.
Although gold is traditionally regarded as a safe haven, it
has increasingly moved in tandem with other riskier assets due
to investor jitters. Shares on Wall Street turned higher, up
less than 1 percent after initially hit by jitters over
Europe's debt crisis.
Spot gold fell 9 cents to $1,779.80 an ounce by 2:40
p.m. EST (1940 GMT), having traded as low as $1,760.04 an ounce
early on Tuesday.
U.S. gold for December delivery settled up $3.80 at
$1,782.20. Trading volume was around one-tenth below its 30-day
norm, above its previous session's turnover and consistent with
the recent trading pace.
Silver rose 0.6 percent to $34.43 an ounce.
PAULSON CUTS GOLD ETF
Gold largely held its ground after it was reported that
Paulson & Co. cut its holding in the SPDR Gold Trust to
20.3 million shares from 31.5 million at the end of the second
quarter, a U.S. regulatory filing showed late on Monday.Paulson has long been the biggest holder of SPDR shares,
using them to hedge currency exposure, while other managers
like David Einhorn and Daniel Loeb have favored more discreet
investments in physical bullion. Gold is the biggest holding in
Einhorn's $8 billion Greenlight Capital, he said last week.
The move is likely a combination of two unrelated factors:
end-of-year client redemptions and a desire to reduce his
exposure to the regulated U.S. ETF in favor of less visible
swaps, forwards or physical holdings that are not reported in
quarterly 13-F filings, a person familiar with his thinking
said.
"I don't think it means anything. It's a technical issue
related to the fact that he needed to raise cash to meet
perspective redemption from his hedge fund that is having a
very difficult year," Mark Luschini, chief investment
strategist of broker-dealer Janney Montgomery Scott, which
manages $54 billion in client assets
Among platinum group metals, platinum fell 0.2
percent to $1,634.75 an ounce and palladium gained 0.1
percent to $660.75 an ounce.
Johnson Matthey Co , the world's top supplier of
catalytic converters that use platinum group metals to clean
car exhaust, said that palladium prices could climb higher and
that investors would be net buyers in 2012 after they sold an
estimated 215,000 ounces in 2011.
2:40 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1782.20 3.80 0.2 1760.90 1787.80 115,833
US Silver DEC 34.456 0.432 1.3 33.750 34.835 41,687
US Plat JAN 1642.70 -1.40 -0.1 1623.10 1657.00 4,678
US Pall DEC 667.05 2.75 0.4 656.70 670.80 2,227
Gold 1779.80 -0.09 0.0 1761.20 1785.35
Silver 34.430 0.220 0.6 33.770 34.780
Platinum 1634.75 -2.74 -0.2 1624.25 1652.00
Palladium 660.75 1.00 0.2 658.80 667.47
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 130,190 148,815 188,783 27.06 -0.64
US Silver 51,383 47,653 79,056 44.97 3.23
US Platinum 4,982 6,829 7,510 34.26 0.60
US Palladium 3,194 3,681 4,327