Gold slides in Europe

Gold was down 1 percent in Europe on Friday as the dollar hit a seven-month high versus a basket of currencies after China unveiled a surprise hike in commercial banks' reserve requirements. The euro slipped to a nine-month low against the dollar after a European Union summit the previous day failed to quell investors' concerns on Greece, and as China's surprise monetary tightening hit assets seen as higher risk.
Spot gold was bid at $1,085.60 an ounce at 1529 GMT versus $1,095.85 late in New York on Thursday. In that session it hit a one-week high of $1,097.75 an ounce as investors bought the metal amid fears over the stability of paper currencies. Michael Widmer, an analyst at Bank of America-Merrill Lynch, said gold was coming under pressure as the dollar appreciated broadly on the back of the China news.
US gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell to $1,087.00 an ounce. The dollar hit its highest since late July against a basket of currencies on Friday after China surprised markets by raising commercial banks' reserve requirements. Other commodities also declined, with oil tumbling nearly 3 percent to below $74 a barrel and base metals copper and zinc sliding nearly 3 percent at their lows.
Gold priced in euros performed particularly well on Thursday, rising 2.8 percent to a peak of 802.73 euros an ounce, within 10 euros of the record high it hit in December. The metal eased on Friday to 796.87 euros an ounce from 799.49 late in the last session, but from a technical viewpoint it is well positioned to make fresh gains, analysts said.
"Since early December, gold denominated in euros has been locked in a well-defined contracting range," said technical analysts at Barclays Capital. "Now that range is on the verge of giving way for a resumption of the larger bull trend.
On the supply side, the head of the Russian Gold Industrialists' Union lobby group said Russia may lift gold output to 207 tonnes this year from 205 tonnes in 2009, with mine output rising 5 tonnes to 183 tonnes. Among other precious metals, silver was at $15.38 an ounce against $15.64. Platinum was at $1,501.50 an ounce against $1,528 and palladium at $412.50 against $419.50.