* 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 (Reuters) - 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.
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 bullion imports.
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 ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Dale Hudson)