* Steadying dollar pulls gold from 6-week high
* Prices set to rise for fifth week as equities weaken
* Gold premiums in India down 30 pct on import speculation
(Updates throughout, changes dateline, previous SINGAPORE)
By Jan Harvey
LONDON, Jan 24 Gold prices eased on Friday from
the previous session's six-week high as the dollar steadied
after its biggest one-day drop in three months, and
bullion-backed exchange-traded funds registered more outflows.
The metal remains on track for a fifth straight weekly gain,
however, as world stocks headed for their worst week this year,
boosting interest in gold as an alternative asset.
Prices rallied more than 2 percent on Thursday as a drop in
the dollar and a call from India's ruling party chief to review
import restrictions on bullion prompted short-covering.
Spot gold was down 0.3 percent at $1,260.10 an ounce
at 1019 GMT, while U.S. gold futures for February
delivery were down $2.50 an ounce at $1,259.80.
"Yesterday gold's move was down to the very weak U.S.
dollar, falling U.S. bond yields and declining equities, while
in addition, we had some calls from India to ease import
restrictions," Commerzbank analyst Daniel Briesemann said. "That
also contributed to the price rise."
"On the other hand we've seen a renewed strong outflow from
the gold ETFs, which leads us to the conclusion that the price
increase yesterday was mainly speculatively driven. That raises
questions over whether it was sustainable."
"We think, all things being equal, that we may see some more
setbacks before gold can move higher."
Gold is on track to end the week up 0.5 percent, recording a
fifth straight weekly gain for the first time since September
2012. Global stock prices fell as worries mounted over an
economic slowdown in China and U.S. monetary policy.
The world's largest gold-backed ETF, New York's SPDR Gold
Shares, said its holdings declined by 5.4 tonnes on
Thursday, bringing its outflow for the week to 6.6 tonnes. It
logged its first weekly inflow since early November last week.
Chinese demand eased, with premiums on the Shanghai Gold
Exchange dropping to $10 an ounce from $12 the previous day.
China took over from India as the world's leading consumer of
gold jewellery in 2013, data from metals consultancy Thomson
Reuters GFMS showed.
INDIAN GOLD PREMIUMS FALL
Gold premiums in India, the second-biggest buyer of the
metal, fell more than 30 percent on Friday from earlier this
week on speculation over a possible easing of restrictions on
Premiums were quoted at $75-$85 an ounce on London prices on
Friday, compared with $110 on Wednesday.
Sonia Gandhi, leader of India's ruling Congress party, was
reported on Thursday to have asked the government to review
import restrictions, which sharply cut supplies available to the
country's bullion dealers last year.
UBS says while any significant change in the regulatory
environment is probably unlikely until after elections due by
May, many market participants expect some adjustments.
Among other precious metals, platinum was the biggest
faller, down 0.7 percent at $1,441.50 an ounce, as traders bet
strikes in South Africa's platinum mining sector would be less
damaging than feared.
Spot silver was down 0.3 percent at $19.94 an ounce,
while spot palladium was down 0.2 percent at $740.25 an
(Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Dale Hudson)