REUTERS, TOKYO- Gold hovered near a four-month low on Friday, weighed down by the dollar's recovery against the euro and lower oil prices, with sharp draws in gold exchange-traded funds providing additional pressure.

Light short-covering kept cash gold near late New York levels after losing about 6 percent in the last week. Gold fell as far as $847.10 an ounce on Thursday -- the lowest since early January.

By 0611 GMT, spot gold was at $849.80/850.75 an ounce, slightly down from $850.25/851.65 in late New York. "The trend is clearly downward. Sentiment deteriorated further after slipping below the psychological level of $850," said Tatsuo Kageyama, analyst at Kanetsu Asset Management in Tokyo.

"Gold was falling as the dollar rebounded strongly. The outlook for gold also turned very weak after seeing sharp drawdowns in gold ETFs."

Gold held in New York-listed StreetTRACKS Gold Shares XAUEXT-NYS-TT, the world's largest gold-backed exchange-traded fund, fell to 580.45 tonnes as of Wednesday, shedding nearly 10 percent of its holdings in the last 10 days.

Kageyama said gold could fall further and could test $800 depending on the moves in the dollar and oil prices. Cash gold slipped through key moving average levels following falls in the past two weeks. The next key support is around the 200-day moving average of $823.46.

COMEX gold futures rebounded on Friday after losing 1.6 percent in New York. The June contract GCM8 was up $1.3 or 0.15 percent at $852.2 from the New York settlement. Japanese precious metals futures fell sharply in line with falls in post-Tokyo trade on Thursday, with gold futures down 1.5 percent at a one-month low and platinum diving nearly 4 percent to a five-week low.

The key April 2009 gold contract on the Tokyo Commodity Exchange was trading down 44 yen, or 1.5 percent, at 2,887 yen per gram from the previous day's 2,931 yen. On Thursday, the dollar rose to five-week highs against the euro after a key U.S. manufacturing index for April came in slightly better than expected. Traders were awaiting the April U.S. employment report due at 1230 GMT.

Economists in a Reuters survey expect to see 80,000 jobs lost in the month, a repeat of the March loss. The unemployment rate is seen at 5.2 percent compared with a 5.1 percent a month earlier. U.S. crude oil futures fell on easing supply worries in Nigeria and concerns that demand, especially in the United States, is being curbed by high prices.

Front-month U.S. crude for June delivery CLc1 was down 64 cents, or 0.5 percent, at $111.88 a barrel on electronic trading. It extended losses on Thursday, when it settled lower by 94 cents, or 0.83 percent, at $112.52.

Platinum fell to $1,826.50/1,846.50 an ounce from $1,860.50/1,880.50 in New York. Palladium fell to $399.00/407.00 an ounce from $406/414. Silver inched down to $16.13/16.19 an ounce versus $16.16/16.22 late in New York.