* Equities rally in Europe, Asia after corporate earnings
* Euro declines after Portuguese debt auction
* Coming up: Fed chair Bernanke's testimony before Congress
(Updates prices, adds comment, detail)
By Jan Harvey
LONDON, July 21 (Reuters) - Gold firmed in Europe on
Wednesday after a weak Portuguese debt auction stoked concerns
over the fragility of the euro zone banking sector, knocking the
euro, but gains were limited by softer investment demand.
A 6.1-tonne fall in holdings of the world's largest
gold-backed exchange-traded fund, the SPDR Gold Trust <GLD>, on
Tuesday, their biggest one-day decline since December, indicates
waning investor confidence in the metal, analysts said.
Spot gold <XAU=> was bid at $1,194.15 an ounce at 1331 GMT,
against $1,191.40 late in New York on Tuesday. U.S. gold futures
for August delivery <GCQ0> rose $2.70 an ounce to $1,194.40.
"I think gold can get back above $1,200 an ounce," said
Citigroup analyst David Thurtell.
"There was a lot of buying in April, May and June on the
back of these sovereign debt worries. Once some of those fears
subsided, gold came down again, but there are still enough
people out there who are worried to buy gold below $1,200."
The euro slipped versus the dollar on Wednesday after the
Portuguese debt auction. Portugal sold 1.25 billion euros in
12-month Treasury bills, but the average yield more than doubled
from the last sale, indicating caution. [] []
Equities meanwhile performed strongly, with world stocks
rising after strong earnings and forecasts from tech heavyweight
Apple raised expectations for solid second-quarter results from
other major companies. []
European shares surged, while U.S. stocks rose at the open.
[] []
Among other commodities, oil rose above $78 a barrel and
base metals like copper strengthened after strong U.S. corporate
earnings raised optimism over the strength of the recovery in
the world's largest economy. [] []
Looking ahead, the financial markets are awaiting Federal
Reserve Chairman Ben Bernanke's testimony on economic and
monetary policy before Congress later on Wednesday.
Analysts will be watching for any suggestion that the Fed
may extend its programme of quantitative easing.
STEADY SLIP
Gold has slipped since reaching a record $1,264.90 an ounce
at the end of June, boosted by investment in the metal as a
haven from volatility in other markets amid concerns over the
economic outlook and euro zone sovereign debt levels.
The outlook for bullion remains broadly positive, however.
Respondents to a Reuters poll of 55 analysts, traders and
fund managers said they see gold prices posting an eleventh year
of gains in 2011 as investors seek refuge from an uncertain
global economic outlook. []
The poll showed expectations for gold prices in 2011 have
risen by nearly 7 percent to a median $1,228 an ounce since a
similar survey conducted in January. For 2010, expectations for
gold have risen by 4 percent to a median $1,197.00 an ounce.
"The market is expected to derive strength from further
economic pitfalls and the near-zero interest rates maintained by
the U.S. Federal Reserve," said Harish Galipelli, head of
commodity research at JRG Wealth Management.
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For a graphic detailing the poll results, click on:
http://graphics.thomsonreuters.com/F/07/CMD_PRCPL0710.html
For a Reuters Insider interview on the poll results, click
on: http://link.reuters.com/vyp58m
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Among other precious metals, silver <XAG=> was at $17.81 an
ounce versus $17.65, platinum <XPT=> at $1,523.50 against
$1,512.95 and palladium <XPD=> at $452.03 versus $449.53.
Refiner Johnson Matthey reported a 47 percent rise in
first-quarter profit as it recovered from a slump in demand, and
forecast an improved full-year performance.
The platinum refiner and the world's largest supplier of
catalytic converters said on Wednesday April-June sales
excluding precious metals rose 32 percent year on year.
Falling demand for automotive products hit the group last
year as the recession took its toll on sales.
(Editing by James Jukwey)
