By: Angela Sharda

London 09/10/2012 - Gold was confined to a narrow range of less than $10 on Tuesday morning, consolidating after falling around 1.7 percent from Friday's 11-month high.

Spot gold was last at $1,772.18-1,772.66 per ounce, down $2.88 from Monday’s close. It fell as low as $1,770.19 earlier but remains above yesterday's low of $1,766.71.

“While investor interest in the yellow metal has clearly picked up, technical indicators suggest that the current consolidation may continue a little longer before prices re-accelerate eventually,” Credit Suisse said.

After gaining around 10 percent across August and September, gold has stepped lower for two consecutive sessions after US jobs data on Friday boosted the dollar - the country's unemployment level fell to 7.8 percent in September from 8.1 percent in August - while the eurozone debt saga continues to unsettle investors.

The Eurogroup has given Greece a deadline of October 18 to implement additional economic reforms in exchange for new financial assistance.

More than 7,000 police officers are on duty and tight security measure are in place in Athens ahead of a visit by German Chancellor Angela Merkel on the invitation of Greek Prime Minister Antonios Samaras, who wants reassurance that Greece can remain a member of the euro.

“Angela Merkel, rather bravely in my humble opinion, is visiting Greece. I'm not sure that she will be welcomed with open arms and apparently the security for her visit is overwhelming, which tells you all you need to know about harmony in the eurozone,” David Govett, head of precious metals at Marex Spectron, said.

The euro slipped back from initial levels near 1.3000 against the dollar to some 1.2933, up from its intraday low of 1.2904.

Yesterday, the IMF painted a gloomy picture for the global economy, cutting its forecasts for global growth. New forecasts were revised down, suggesting the world economy will grow 3.3 percent in 2012 down from the predicted level of 3.5 percent in July.

In the UK, the IMF has called for policy makers to prepare for "plan B" should growth not improve in the coming quarters. The fund predicts the UK economy to contract by 0.4 percent this year followed by growth of 1.1 percent next year.

It sees Indian growth weakening to a decade low because of poor investment by local and international business, with GDP rising 4.9 percent this year, down from its prediction of 6.1 percent in July.

Market participants today await data on France’s budget and trade balance, UK manufacturing and industrial production and GDP estimates, while the IBD/TIPP economic optimism reading is due from the US.

Despite the retreat in gold prices since Friday afternoon, gold exchange-traded funds (ETFs) remain in favour - the funds followed by FastMarkets hit another all-time high of 2,592.72 tonnes on Monday, up 8.92 tonnes on the Friday total of 2,583.8 tonnes. SPDR gold trust holdings increased a further 7.08 tonnes, continuing the recent run of gains.

In other precious metals, silver was last at $33.90-33.95 per ounce, down eight cents from Monday’s close, platinum at $1,692.50-1,693 was up $6.80 and palladium was little changed at $656.25.


(Editing by Mark Shaw)