* Gold falls 3.9 percent, low physical demand also weighs
* Euro likely to see further losses ahead of ECB meeting
(Updates prices, adds comments)
By Anna Stablum
LONDON, Jan 12 (Reuters) - Gold shed 3.9 percent on Monday dragging the other precious metals lower as oil fell and the euro extended losses against the dollar, while physical demand was seen softening.
By 1652 GMT spot gold was trading at $823.85 an ounce, down 3.5 percent from $853.60 in New York late on Friday.
Earlier it hit $820.10, the lowest since Dec. 12.
"Physical demand in the key demand centres continues to be lethargic with limited purchases," analyst Pradeep Unni at Richcomm Global Services said.
Gold could drop substantially in the next couple of months, Unni said.
Traders said the firm dollar and soft oil price drove gold lower, dragging down the precious metals complex.
Dollar-priced commodities tend to fall if the dollar strengthens as it makes them more expensive for holders of other currencies.
The euro fell to $1.3347 amid talk of an aggressive cut in eurozone interest rates later this week, with speculation rife the European Central Bank will cut its key lending rate by 50 basis points to 2 percent. The ECB meets on Thursday
Although investor interest in gold was currently positive a firmer dollar could weigh on gold prices in the near term, a Barclays Capital report said.
"Our forex strategists forecast the dollar to strengthen against the euro on a 1-month and 3-month basis," it said.
Oil fell below $38 a barrel on persistent worries about falling demand following Friday's dismal U.S. payrolls report, which showed 1.1 million jobs lost since November and the highest unemployment rate since 1993..
In theory, a weaker oil price reduces gold's appeal as a hedge against inflation.
"We expect crude oil to remain weak in the first quarter," Standard Bank said in a report. "Precious metals, especially gold, should find little support from this front."
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Physical demand for gold was seen softening after holding firm in the normally strong fourth quarter.
"It tends to tail out in the first quarter ... the market over the next few weeks will probably focus on weaker demand," analyst Michael Widmer at BNP Paribas said.
Gold has bounced more than 20 percent since tumbling to a 13-month low around $680 in late October. Bullion struck a record $1,030.80 last March.
On COMEX, speculative gold players boosted their net long positions to 133,604 at Jan. 6, up from 125,961 net longs at Dec. 30, Commodity Futures Trading Commission data showed.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said it held 787.60 tonnes of gold as of Jan. 9, down 0.28 tonnes from a record 787.88 tonnes on Jan. 7.
Holdings in the trust, which issues securities backed by physical stocks of gold, began climbing again in December after poor prospects for the global economy ignited demand for bullion as a safe-haven asset.
Platinum was trading at $965.50 an ounce after hitting $944, down 4.9 percent from $992.50 in New York on Friday. Palladium was lower at $183.50 after falling to a low of $183, down 4.2 percent from $191 late in New York on Friday.
Silver was at $10.95 after touching a low of $10.74, down 4.5 percent from New York's $11.24.
New York gold futures fell $32.8 an ounce to $829.
(Additional reporting by Pratima Desai in London and Lewa Pardomuan in Singapore, editing by Sue Thomas)