LONDON, Dec 10 (Reuters) - Gold fell one percent on Friday
after China raised bank reserve requirements and U.S. data
showed improvement in the world's top economy, which boosted the
dollar and dulled the allure of precious metals.

 Spot gold XAU= was at $1,375.29 an ounce at 1527 GMT, from
$1,387.39 late in New York on Thursday. It earlier hit a session
low at $1,371.90, down from a record high at $1,430.95 touched
on Tuesday. U.S. gold futures GCG1 were lower at $1,377.80.

 "The gold market is probably correcting on the back of the
stronger dollar," said BNP Paribas analyst Anne-Laure Tremblay,
adding year-end book squaring was also aiding downside pressure.

 "Investors who have performed well this year may be looking
to protect their gains rather at this stage." 

 U.S. consumer sentiment rose more than expected in early
December while an index of current conditions jumped to its
highest level since January 2008, a survey released on Friday
showed. 

 Earlier, data showed the U.S. trade deficit narrowed much
more than expected in October, a Commerce Department report
showed on Friday, which lifted the dollar [ID:nN09288102] [USD/]

 "It's a mixture of the (U.S.) data but more importantly the
Chinese news that came out," said Afshin Nabavi, head of trading
at MKS Finance in Geneva. "But at the end of the day we are
still holding up to the same range seen earlier this week.

 "We are getting close to the year end and there will also be
some liquidation. It looks like some of the longs are taking
advantage of the rallies."

 Earlier however, China's central bank said it was raising
lenders' required reserves by 50 basis points, effective Dec.
20, its sixth official increase this year. [ID:nLDE64D12X]

 "Tighter global monetary policy is bad for gold, and this is
tighter monetary policy. But only slightly, and in one part of
the world, so the impact is not huge," said analyst Matthew
Turner at Mitsubishi Corp.

 Rising interest rates raise the allure of bank deposits for
investors over gold, while also boosting storage costs for the
metal.

 However, concerns over European sovereign debt polished the
metal's appeal as it is seen as a safer investment.

 "Prolonged uncertainty over indebted Eurozone countries will
only be gold supportive," said VTB Capital in a research note.

 INDIA BUYING

  After gold's pull back this week, physical demand has come
in to underpin prices as investors scout for bargains, which
suggests the metal may be finding its feet.

 "Tuesday-Thursday was our strongest three-day run of
physical sales to India since late October, when gold was
trading around $1,320," said UBS analyst Edel Tully.

 "Physical buying from India and other centres this week was
likely one of the reasons more investor longs didn't liquidate,
as strong physical demand is often a sign that a downtrend is
about to bottom."

 Investors are also eyeing a Federal Reserve meeting next
Tuesday, the first after fierce debate on whether the central
bank's further quantitative easing would help the world's
largest economy. 

 Tremblay of BNP Paribas said that a number of issues related
to U.S. monetary policy are supportive of gold, including
questions about the value of the dollar and its role in the
international monetary system.

  Spot silver XAG= sank into negative territory at $28.23
an ounce, against a $28.70 close. In other metals, platinum
XPT= was at $1,667.49 against $1,675.99 while palladium XPD=
was at $730.22 as against $735.97.
 
(Editing by Anthony Barker)

SINGAPORE, Dec 10(Reuters) - Gold held steady on Friday in 
choppy trade, as a dollar rally took a breather, and 
uncertainty over Europe's fiscal health continued to attract 
investors to bullion.	

 Ireland's debt woes continued to grab attention from  
investors, as Fitch downgraded the country's rating, and the  
opposition party said it would vote against a bailout package. 	

 The dollar paused from a rally earlier in the week as 
strong demand at a 30-year Treasury bond auction knocked 
yields lower, while the euro won a reprieve early in Asia. 
 

 Traders said the market was set to trade in choppy range 
as interest ebbs at year-end.	

 "Gold seems to be finding a base after the last two-day 
big sell-off," said a Singapore-based trader, "Physical demand 
should be the key to support at these levels; with downside 
critical support at $1,371."	

 Gold was expected to trade in the range of $1,370 to 
$1,400, he added.	

 Spot gold edged up 0.2 percent to $1,389.86 an 
ounce by 0325 GMT, heading for a 1.7 percent weekly decline.	

 U.S. gold futures inched down 0.2 percent to 
$1,390.7.	

 Many traders are winding down positions ahead of the 
year-end.	

 "It's more of a positioning story," said a second 
Singapore-based trader, "We saw some sell-off as people tried 
to pre-position before next year. In the medium term, everyone 
agrees there is still a long way to go for gold, as dollar 
weakness will still be a dominant trend going into next year."	

 Investors are also eyeing a Federal Reserve meeting next 
Tuesday, after much debate on whether the central bank's 
further quantitative easing would help the world's largest 
economy. 

 "People are looking at the FOMC meeting to see if the QE2 
(second round of quantitative easing) would be increased. In 
that case, it would support gold prices," said Ronald Leung, a 
physical dealer at Lee Cheong Gold Dealers in Hong Kong.	

 Holdings in the SPDR Gold Trust , the world's largest 
gold-backed exchange-traded fund, had been trending down in 
the past week. It declined 1.518 tonnes to 1,293.778 tonnes by 
Dec 9 from the previous day. 

 In comparison, holdings in the iShares Silver Trust , 
the world's largest silver-backed exchange-traded fund, stayed 
at its record level of 10,941.34 tonnes. 	

 Spot silver rose by 0.7 percent to $28.89 an ounce, 
leading the precious metals complex and headed for a 1.5 
percent weekly decline.	

 The head of Coeur d'Alene Mines Corp , the  world's 
biggest silver miner, said gold and silver would  benefit from 
continuing economic uncertainty. 	

   	
  Precious metals prices at 0325 GMT                                  
  Metal             Last    Change  Pct chg  YTD pctchg  Turnover     
  Spot Gold        1389.86    2.47   +0.18     26.85                  
  Spot Silver        28.89    0.19   +0.66     71.66                  
  Spot Platinum    1679.49    3.50   +0.21     14.48                  
  Euro/Dollar       1.3244                                            
  Dollar/Yen         83.69