LONDON, Dec 19: Gold dips more than 2 per cent in thin volumes on Friday as the euro lost ground against the dollar and bullion’s recent rally slowed the pace of physical purchases, traders and analysts said.

Spot gold fell to $833.70 an ounce against $852.15 an ounce late in New York on Thursday. It had traded as high as $853.10.

Bullion rallied to a two-month high of $881.20 this week, boosted by the gains in the euro, which had been on track to post a weekly rise of more than 5 per cent against the dollar, its biggest since the single currency was launched in 1999.

Bullion tends to move in the opposite direction to the dollar as a strong US currency makes gold more expensive for local currency holders.

We are going to be bouncing around the range but the tendency is towards the downside for gold, Kendall said, adding oil’s falls this week was also putting pressure on bullion.

Despite gold’s impressive 20 per cent rally in December alone, some thought the outlook remained bearish.

Gold cannot be immune to this, said Fortis Metals in a research note. It will be hit by a decline in jewellery demand, at least of the adornment variety.

Local jewellers in Dubai’s traditional gold markets said this week that sales had collapsed as much as 80 per ent in the last couple of weeks.

Volatility is more of a deterrent than the absolute price level to people particularly in jewellery business, Kendall at Mitsubishi said.

Technicals offered little support, others added.

Gold was in an overbought zone and warranted a correction, said precious metals analyst Pradeep Unni at Richcomm Global Services in Dubai.

Technically, gold is still very weak and hence a swift sell off to $820 and lower cannot be ruled out, as most momentum indicators are hovering in the uncomfortable overbought zones and have started to turn back, he said.

Spot platinum was at $847.50 an ounce versus $849.50 while spot palladium was $1 higher at $175.50 an ounce.

Silver edged down to $10.80 from $10.93. COMEX gold futures for February delivery were down 2.39pc at $840.00 per ounce.

The contract fell $7.90 on the NYME on Thursday.—Reuters