* Falling stocks, sovereign debt worries support
* Low U.S., ECB rate outlooks seen positive
* Coming up: U.S. Q1 GDP, Core PCE prices on Friday
(Recasts, updates prices, adds comments, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, June 24 (Reuters) - Gold rallied toward $1,250 an
ounce on Thursday, gaining nearly 1 percent as lingering
economic worries and an equity market slump triggered
safe-haven demand.
The metal jumped $10 early in the session as U.S. stock
markets tumbled to session lows. Bullion has recouped the
previous session's losses due to lackluster housing data and a
less optimistic growth outlook from the Federal Reserve.
Lingering sovereign credit risk pressured markets, traders
said. Greece's finance minister called for "great moves" to
safeguard the banking system and European policymakers defended
austerity plans ahead of a G20 summit. []
[]
"When there is uncertainty in the market, people tend to go
to gold as a safe haven in a flight to quality," said Jeff
Pritchard, analyst at California-based broker Altavest.
Spot gold <XAU=> was at $1,245.95 an ounce by 12:58 p.m.
EDT (1658 GMT), versus $1,235.20 late in New York on Wednesday,
having hit an earlier intraday low of $1,227.75. U.S. August
gold futures were last up $12.90 at $1,247.70 <GCQ0>.
Having hit a record $1,264.90 on Monday, prices have
struggled to make further upward headway, which has left the
market prone to short-term setbacks.
Gold came under pressure earlier as it reestablished its
traditional inverse correlation with the dollar <.DXY> and the
link strengthened later as the U.S. currency fell.
Stock markets fell after the Fed acknowledged a faltering
pace of U.S. economic recovery on Wednesday as it renewed a vow
to hold benchmark interest rates exceptionally low for an
extended period. []
The unfolding sovereign debt crisis in Europe remained in
focus as index-linked fund managers ditched Greek government
bonds, widening the spread between Greek yields and other
benchmarks and increasing the cost of insuring Greek government
debt against default. []
"We've identified this as being the primary support for
gold prices this week," said Nic Brown, senior analyst at
Natixis.
"It's a central theme and a lot of what we've said about
gold is that the credit problems on the sovereign side are the
main driving force behind the rise in gold right now" he said.
A drop in weekly U.S. initial jobless claims and a rise in
big-ticket manufactured goods offered some hope about the
fragile economic recovery. But the market still believes U.S.
interest rates will remain low. []
"Low interest rates are generally good news for precious
metals. We believe that the Fed and the ECB (European Central
Bank) will remain on hold for quite some time because of the
European debt problems," said Tobias Merath, an analyst at
Credit Suisse.
Technical analysts were positive on the market's ability to
breach new highs, despite its current lack of traction.
Altavest's Pritchard said gold is trading sideways in an
"ascending triangle" pattern. (Graphic:
http://link.reuters.com/byp73m )
In other precious metals, platinum <XPT=> was down at
$1,557.50 an ounce, versus $1,566.00 on Wednesday, while
palladium <XPD=> was at $467.95 from $471.00, having earlier
fallen by as much as 2.3 percent.
Silver <XAG=> rallied in line with gold, rising to $18.75
an ounce, from $18.45 the day before.
Prices at 1:08 p.m. EDT (1708 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCQ0> 1247.30 12.50 1.0% 13.8%
US silver <SIN0> 18.750 0.291 1.6% 11.3%
US platinum <PLN0> 1561.60 -5.40 -0.3% 6.2%
US palladium <PAU0> 473.00 -1.35 -0.3% 15.7%
Gold <XAU=> 1246.20 11.00 0.9% 13.7%
Silver <XAG=> 18.75 0.30 1.6% 11.3%
Platinum <XPT=> 1556.50 -9.50 -0.6% 6.2%
Palladium <XPD=> 469.50 -1.50 -0.3% 15.8%
Gold Fix <XAUFIX=> 1236.25 3.00 0.2% 12.0%
Silver Fix <XAGFIX=> 18.38 -53.00 -2.8% 8.2%
Platinum Fix <XPTFIX=> 1549.00 6.00 0.4% 5.7%
Palladium Fix <XPDFIX=> 466.00 1.00 0.2% 15.9%
(Additional reporting by Amanda Cooper and Veronica Brown in
London)
