PRECIOUS-Gold extends losses as dlr holds near 3-week high

* Gold eases; focus on dollar, Indian demand worries

* Seen higher in first quarter, may ease later in year
(Updates prices)

By Nick Trevethan

SINGAPORE, Jan 6 (Reuters) - Gold extended losses on
Tuesday, slipping more than 1 percent following Monday's drop
of nearly 2 percent, faltering as the dollar reversed recent
losses.

Bullion's near-term direction remained pinned to the
dollar, which rose 0.5 percent against the euro, to $1.3542
EUR=, holding near three-week highs versus the single
currency. [USD/]

"We had a bullish tilt towards gold through December but
further strength in the dollar might see gold erode some of
those gains," said Toby Hassall, research analyst at Commodity
Warrants Australia.

Risks appeared weighted towards a stronger dollar and gold
prices could slip another 15 percent or more in the next three
months, he added.

Gold XAU= traded $10.60, or 1.2 percent, lower at $848.30
an ounce by 0730 GMT, from New York's notional close on Monday,
when it dipped to $843.50, its lowest in over a week.

But prices around $850 to $900 could mark gold's strongest
quarter until the end of 2010.

"Gold could end this quarter above $900, but that may be
the high for the year. By year-end it could fall as low as $700
or even $650," an Asian fund manager said.

"We are pessimistic out to the middle, or the end, of
2010," he said, adding that other commodities were also set to
fall further.

Oil prices CLc1 fell 1.3 percent to $48.20 a barrel,
retreating after sharp gains in the past week or so on
geopolitical worries in the Middle East and a dispute between
Russia and Ukraine over gas pricing.

Oil has rallied from around $35 a barrel since Israel
launched its Gaza offensive on Dec. 27, heightening fears of
possible disruptions of crude supplies from the Middle East.
[ID:nL5700436]

But not all analysts were looking for the dollar rally to
continue.

"The dollar is the key short-term driver for gold. Over the
course of the quarter we expect the dollar to weaken against
the euro," said David Moore, Commonwealth Bank's commodities
strategist in Sydney.

Worries about the ailing international economy in the first
half of 2009 would generate some safe haven demand for bullion,
but slowing physical demand from India was a concern, he added.

"Indian gold imports were very low and that could be
significant. An impairment of Indian demand for jewellery could
take out some of the floor under gold prices."

Gold imports by India, the world's largest buyer of the
metal, fell 81 percent in December, and were down 47 percent in
2008 as high prices and a slowing economy dented demand.
[ID:nL4551125]

New York gold futures GCG9 fell $9.9 an ounce to $847.9
in electronic trade, while in Tokyo, December 2009 futures
JAUc6 were down 1.8 percent at 2,547 yen per gram.

Spot platinum XPT= dropped 1.5 percent or $14.50 to
$931.50 an ounce, but the TOCOM benchmark JPLc3 rose 1.2
percent to 2,799 yen per gram, bringing its gains since the
start of the year to 5.5 percent.
Precious metals prices at 0730 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 848.30 -10.60 -1.23 -3.62
Spot Silver 11.01 -0.21 -1.87 -2.74
Spot Platinum 931.50 -14.50 -1.53 -0.05
Spot Palladium 181.00 -2.50 -1.36 -1.90
TOCOM Gold 2550.00 -44.00 -1.70 -0.89
40195
TOCOM Platinum 2799.00 33.00 +1.19 5.54
10480
TOCOM Silver 328.30 -10.10 -2.98 2.82
847
TOCOM Palladium 554.00 -24.00 -4.15 0.73
519
Euro/Dollar 1.3531
Dollar/Yen 93.20
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Reporting by Nick Trevethan; Editing by Clarence Fernandez)