Gold dips in London

Spot gold slipped to a one-week low in late European trade on Friday after the dollar extended gains on data showing US consumer prices for November came in higher than expected.
Spot gold fell as low as $787.60 an ounce, the lowest since December 6, and was quoted at $790.75/791.45 by 1547 GMT, against $797.10/797.80 late in New York on Thursday, when it tumbled around 2 percent.
"Gold is quite sensitive to small changes in sentiment about the dollar. Any data that suggest that US interest rates won't come down would support the dollar and harm gold," Matthew Turner, precious metals analyst at Virtual Metals, said.
The dollar rose to a seven-week high against a basket of currencies after strong US consumer price data trimmed expectations of aggressive rate cuts from the Federal Reserve. US consumer prices for November rose at their fastest pace in more than two years, which may limit the Fed's willingness to cut rates and in turn preserve the return on dollar assets.
A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. Dealers said thin market conditions ahead of Christmas and the New Year exposed the metal to wide fluctuations. It was expected to trade in a broad range of $785-$820 an ounce for the rest of the year.
"The market has been pivoting around $800 recently and we are seeing quite a lot of backwards and forwards around the level," David Holmes, director of metals sales at Dresdner Kleinwort, said.
"The trade seems to me to be pretty much within a range, with selling above $810 and buying just around the $790 level. There would be continued volatility, but smaller volumes during the rest of the year."
Gold has lost more than 6 percent since hitting a 28-year high of $845.40 an ounce in early November as investors and speculators booked profits ahead of the year-end. It hit its lowest in nearly two weeks at $777 in early December.
"For next week, we expect things to calm down a bit, with physical industrial demand, not only in Asia, but also in Europe, slowing down and should see the metal trading in the $792-$822 an ounce range," Wolfgang Wrzesniok-Rossbach, head of metals sales at Germany's Heraeus, said in note.
In other bullion markets, Japanese gold futures fell. The key October 2008 contract ended 10 yen per gram lower at 2,925 yen. US gold futures also declined, with the February contract trading down $8.3 an ounce at $795.70.
In market news, exports of once dominant Italian jewellery to the key US market fell 7.1 percent year-on-year to 439 million euros ($645 million) in the first eight months of 2007.
The US market once accounted for up to 25 percent of all Italian jewellery sold abroad, but a strong euro against the dollar, high US export duties and competition from India, China and Turkey have cut Italian sales there in the past years. Platinum dropped to $1,465/1,470 an ounce from $1,476/1,480 in New York, while palladium fell to $345/349 an ounce from $346/349. Silver was down at $13.81/13.86 an ounce, versus $14.04/14.09.