* Gold heads for worst weekly decline since March
* Coming Up: U.S. PPI April; 1230 GMT
(Updates prices, adds China factory output data)
By Lewa Pardomuan
SINGAPORE, May 11 Gold slipped more than half a
percent on Friday, tracking equities lower, as investors failed
to shake off worries about Europe's debt crisis and its impact
on global economic growth.
Gold, though traditionally seen as a safe haven, bore the
brunt of the sell-offs across risk assets such as equities,
industrial metals and oil this week, forcing investors and
speculators to sell bullion to cover losses in other markets.
Gold fell $11.02 an ounce to $1,582.71 by 0644 GMT
after shares in Asia were hit by JPMorgan's $2 billion
loss from a failed hedging strategy, political turmoil in the
euro zone and also by weak economic data from China.
Bullion is poised to fall by more than 3 percent this week,
its deepest drop since early March.
"We are still uncertain about what's happening out of the
euro zone. For now, I think gold will trade largely like a risk
asset and probably track equities as well. Support level is
about $1,500," said Lynette Tan, an analyst with Phillip Futures
"The increase we saw yesterday was a bit of bargain hunting
from a three-day losing streak."
U.S. gold for June delivery dropped $12.50 to
$1,583.00, having briefly risen above $1,600 on Thursday.
MSCI's broadest index of Asia-Pacific shares outside Japan
dropped to its lowest since January, with risk
appetite still largely muted due to heightening political and
policy uncertainty in the euro zone.
Investors had turned to gold as a safe haven during the
debt crisis last year, sending prices to an all time high of
around $1,920 an ounce. But this year, bullion is trading more
in line as a commodity that moves in the opposite direction to
the U.S. dollar.
The euro plunged to a 3-1/2 month low on Friday as
news of JPMorgan's trading losses from a failed hedging strategy
spooked investors and lent support to the safe haven dollar.
European Union paymaster Germany warned Greece on Thursday
that European partners could only go on aiding debt-ridden
Athens if it sticks to an international bailout programme
rejected by voters in a general election.
In the physical market, weaker prices ignited buying from
Thailand, Indonesia and also main consumer India. Premiums for
gold bars in Singapore edged up to $1.10 to spot London prices
from $1.0 quoted on Thursday.
"Indian buyers have reappeared, which I think is also due to
the strengthening of the rupee. That helps encourage them to buy
this time around," said a dealer in Singapore.
Bullion dealers shrugged off China's inflation and factory
output data as investors attention remained firmly fixed on the
debt crisis in Europe.
China's annual consumer inflation moderated in April despite
strong food price rises, which could potentially give Beijing
more scope to loosen policy to help the economy rebound from a
first-quarter slowdown in growth.
Industrial production weakened sharply in April as
investment slowed to its lowest level in nearly a decade,
showing an economy that is surprisingly vulnerable to a global
slowdown and a credit crunch at home.
"There's a small amount of selling of gold after we failed
to stay above $1,600 last night. Gold is heading south for the
time being. The economy in the euro zone is very bad, and people
are rushing to buy the U.S. dollar," said a dealer in Hong Kong.
"Let's see if gold eventually breaks $1,580."
Precious metals prices 0644 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1582.71 -11.02 -0.69 1.21
Spot Silver 28.76 -0.22 -0.76 3.86
Spot Platinum 1473.70 -6.83 -0.46 5.79
Spot Palladium 610.70 0.35 +0.06 -6.41
COMEX GOLD JUN2 1583.00 -12.50 -0.78 1.03 21475
COMEX SILVER JUL2 28.76 -0.42 -1.45 3.01 3663
COMEX gold and silver contracts show the most active months
(Editing by Ed Davies)