* Ireland bailout helps euro but jitters persist
* Physical gold demand emerges as prices dip
* Australian Q3 gold production rises 22 pct
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Nov 29 (Reuters) - Gold firmed in Europe on Monday
as the euro recovered from early two-month lows against the
dollar after the announcement of a rescue package for Ireland,
though fears over the stability of the euro zone lingered.
Portugal is the next country that may struggle with its
sovereign debt levels, investors fear, after both Greece and
Ireland were forced to seek bailouts from the European Union
earlier this year. This uncertainty is helping underpin gold.
Spot gold <XAU=> was bid at $1,363.45 an ounce at 1006 GMT,
against $1,361.73 late in New York on Friday. U.S. gold futures
for December delivery <GCZ0> were flat at $1,362.40.
"Ireland has caused a lot of volatility in the markets over
the last few weeks," said Michael Widmer, an analyst at Bank of
America-Merrill Lynch. "What happened over the weekend was not
necessarily a bad thing."
"Some of the immediate concerns, particularly over Ireland,
seem to have been tackled. That overall did help the euro, and
did help the precious metals. There are still underlying issues,
and because of that, it still looks relatively good for the
coming weeks."
The euro rose 0.2 percent against the dollar <EUR=> early on
Monday, recovering early losses, on cautious optimism over the
85 billion euro bailout deal for Ireland. []
EU finance ministers on Sunday endorsed the bailout package
to help Dublin cover bank debts and bridge a budget deficit, and
outlined a permanent system to resolve the euro zone debt
crisis. []
But some concerns lingered over other euro zone economies,
most notably Portugal and then Spain. []
"Portugal's parliament approved the austerity budget on
Friday with the government also fiercely denying rumours it was
under pressure from euro zone policymakers to accept financial
assistance from outside," VTB Capital said in a note.
"Should rumours so vigorously denied by Portugal prove to be
true or fears spill over to Spain, gold will remain well
underpinned."
The cost of insuring Irish government debt against default
fell on Monday, reflecting an easing in investor nervousness
over the outlook for Dublin's finances. However, five-year
credit default swaps on both Spain and Portugal were largely
unchanged. []
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For a graphic showing a comparison of peripheral euro zone
economies, click on: http://r.reuters.com/zem66q
For a graphic showing bank exposure to Spain and Portugal,
click on: http://r.reuters.com/mav37q
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PHYSICAL DEMAND EMERGES
Physical gold demand emerged last week as prices slipped
back towards $1,350 an ounce, expecially in Asia, analysts said.
"Our sales to India Friday were the largest since Oct. 27,
when gold traded under $1,330, and more than double the 2010
daily average," UBS analyst Edel Tully said in a note.
"This is a strong indicator that there's much residual
physical demand in the system that will provide ample support on
dips," she added.
Among other commodities, prices of oil and industrial metals
like copper and tin rose a touch on Monday, with crude futures
climbing to a two-week high. [] []
On the supply side of the market, data showed Australian
gold production rose 22 percent in the third quarter to 67
tonnes. Australia is the world's second biggest gold producer
after China. []
Among other precious metals, silver <XAG=> was at $26.85 an
ounce against $26.66. The world's largest silver exchange-traded
fund, the iShares Silver Trust <SLV>, said its holdings fell to
10,711.23 tonnes on Nov 26 from a record high. []
Platinum <XPT=> was at $1,648.74 an ounce against $1,645,
while palladium <XPD=> was at $682.97 against $674.
(Reporting by Jan Harvey; Editing by Anthony Barker)
