LONDON, Jan 14:- Gold firmed in Europe on Wednesday, supported by a weaker dollar and rising oil prices, though it pared gains as the euro slipped from highs against the US currency and equities and base metals turned negative.

Trading is expected to be muted ahead of the interest rate announcement of the European Central Bank on Thursday. The ECB is widely expected to cut rates by 50 basis points.

Spot gold was at $824.20/825.60 an ounce down from $821.05 late in New York on Tuesday. It touched a high of $828.65 earlier in the session, but slipped as the euro retreated and European equities and base metals turned negative.

In the shorter run, gold is taking support from dollar weakness. Bullion is often bought as an alternative investment to the dollar and tends to move in the opposite direction to it.

Data released on Wednesday showed euro zone industrial production plunged for the seventh month running in November, suggesting the recession is worsening and strengthening views the ECB will cut rates deeply on Thursday.

In Asia, jewellers are buying up gold bars ahead of the Lunar New Year on January 26, dealers said. Premiums for gold bars were steady at between 10 and 20 US cents to spot London prices in Hong Kong.

Jewellery demand in the world’s largest bullion market, India, has however been lacklustre in recent weeks, as buyers await lower prices.

Interest in investment products backed by physical gold, such as ETFs, is also healthy. Bullion holdings of the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, remain near record levels.

Among other precious metals, spot platinum edged up to $955.50/960.50 an ounce from $941, while palladium was quoted at $182.50/187.50 an ounce against $182. Spot silver was at $10.75/10.83 against $10.72.—Reuters