* Euro fails to maintain traction after Ireland bailout
* Physical gold demand emerges as prices dip
* Australian Q3 gold production rises 22 pct
(Updates prices, adds comment)
By Jan Harvey
LONDON, Nov 29 (Reuters) - Gold eased below $1,360 an ounce
in Europe on Monday, surrendering earlier gains, as the dollar
hit a fresh two-month high versus the euro amid concerns over
debt levels in some parts of the euro zone.
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.
Spot gold <XAU=> was bid at $1,359.59 an ounce at 1129 GMT
against $1,361.73 late in New York on Friday, having earlier
risen as high as $1,367.65. U.S. gold futures for December
delivery <GCZ0> eased $3.20 $1,359.10.
The euro <EUR=> fell to its weakest since September versus
the dollar, retreating from an earlier high it hit on cautious
optimism over the 85 billion euro bailout deal for Ireland.
Concerns remain over the stability of the euro zone. []
"Portugal is the next interesting (story)," said Michael
Widmer, an analyst at Bank of America-Merrill Lynch. "There were
newspaper reports out there suggesting that authorities from the
core countries are trying to put pressure on Portugal to apply
for a bailout from the European rescue fund."
EU finance ministers on Sunday endorsed a 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. []
A key question is whether the EU has done enough to prevent
debt problems spreading to other euro zone members such as
Portugal and Spain, something left unresolved after Greece was
bailed out in May.
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. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
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 $26.69 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 $1,646.50 an ounce against $1,645,
while palladium <XPD=> was at $678.22 against $674.
(Reporting by Jan Harvey; editing by Keiron Henderson)
