* Gold takes lead from euro gains vs dollar
* Bullion appears to reestablish positive link with euro
* Eton Park bought $2 billion in gold during Q2
* Coming up: US mortgage refinancing index due Wednesday
(Recasts, updates prices to market close, adds comments)
By Frank Tang
NEW YORK, Aug 17 (Reuters) - Gold rose to a 1-1/2 month
high on Tuesday, gaining for a fourth straight session as the
dollar-denominated metal benefited from a stronger euro against
the U.S. currency.
Bullion investors also took heart in news that top U.S.
hedge fund managers kept their big bets on the metal in the
second quarter when the price of gold rallied to an all-time
high.
(Graphic: http://link.reuters.com/hav55n)
COMEX gold floor trader Mihir Dange said bullion appeared
to reestablish its positive correlation with the euro, after
the relationship broke down earlier this year due to a European
sovereign debt crisis.
"It's the euro-dollar relationship more than anything, and
gold is following euro's lead. It had decoupled at some point
but it's back now," Dange said.
Analysts said gold is strengthening its inverse correlation
relationship with the dollar and a positive link with the
euro.
Still, the currency correlation has largely been erratic so
far this year, as the metal and the dollar both benefited from
safe-haven demand due to fears about global growth at times.
Spot gold <XAU=> hit $1,228.45 -- its highest level since
July 1 -- and was at $1,225.65 an ounce at 3:45 p.m. EDT (1945
GMT), against $1,222.85 late in New York on Monday.
U.S. gold futures for December delivery <GCZ0> settled up
$2.10 at $1,228.30 an ounce.
Trading was quiet in the summer months as volume fell below
60,000 lots, the lowest since August of 2009, preliminary
Reuters data showed.
Gold prices rose in tandem with a near 2 percent Wall
Street rally after data for July showed new home construction
rose and producer prices climbed for the first time in four
months. []
Gold, which had traded in a broad range for two months, has
been in rally mode on worries about a double-dip recession
after a flurry of weak economic data and the Federal Reserve's
downgrade of its economic outlook.
Recent successive gains suggested the metal is poised to
rally again, analysts said, as it posted its biggest four-day
rise in 2 months on Tuesday.
"We think it's a good sign that the market has been able to
recover from a bit of weakness in June and July when the
technical picture didn't look so good," Credit Suisse analyst
Tobias Merath said.
"The longer term outlook is fairly encouraging with dollar
weakness and more importantly after the U.S. Federal Reserve
meeting, bond yields dropped. This is positive as it reduces
the opportunity cost of holding gold," he added.
FUND INTEREST STRONG
Prominent U.S. hedge fund manager Eric Mindich's Eton Park
Capital invested nearly $2 billion in options and equity shares
of SPDR Gold Trust <GLD> in the second quarter, a U.S.
regulatory filing showed.
Interest among others institutional investors remained
steadfast in the second quarter, when gold prices rose nearly
12 percent to a record high of $1,264.90 an ounce on June 21.
[]
On July 1, however, gold prices tumbled more than 3 percent
on a technical break and fund selling.
John Paulson's Paulson & Co. Inc featuring SPDR Gold Trust
<GLD> and Anglogold Ashanti <ANGJ.J> showed no change on the
quarter ending June 30. []
Billionaire investor George Soros also stuck with his big
bet on gold. The fund firm said it owned 5.24 million shares of
the SPDR Gold Trust worth $638 million as of June 30.
[].
COMEX floor trader Dange cited lingering economic
uncertainties for the strong fund interest.
"If there was another bank or country failure, I don't
think it would surprise anybody. As long as there is
uncertainty, there is a need for flight to quality, and the
first direct investment will be gold," Dange said.
Among other precious metals, silver <XAG=> was at $18.63 an
ounce versus $18.35.
Silver markets largely ignored supply issues as Bolivian
protesters ended more than two weeks of demonstrations on
Monday that disrupted operations at two of the world's top
silver deposits. []
Platinum <XPT=> was at $1,538 an ounce versus $1,529.00 and
palladium <XPD=> at $494 against $480.50.
Prices at 4:10 p.m. EDT (2010 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1228.30 2.10 0.2% 12.1%
US silver <SIU0> 18.595 0.168 0.0% 10.4%
US platinum <PLV0> 1546.60 9.30 0.6% 5.1%
US palladium <PAU0> 497.30 11.55 2.4% 21.6%
Gold <XAU=> 1224.95 2.10 0.2% 11.7%
Silver <XAG=> 18.63 0.28 1.5% 10.6%
Platinum <XPT=> 1538.00 9.00 0.6% 4.9%
Palladium <XPD=> 494.00 13.50 2.8% 21.8%
Gold Fix <XAUFIX=> 1226.00 -0.25 0.0% 11.1%
Silver Fix <XAGFIX=> 18.54 34.00 1.9% 9.1%
Platinum Fix <XPTFIX=> 1541.00 3.00 0.2% 5.1%
Palladium Fix <XPDFIX=> 494.00 4.00 0.8% 22.9%
(Additional reporting by Michael Taylor and Veronica Brown in
London; editing by Jim Marshall and Sofina Mirza-Reid)
