* Gold up tad, holds firms vs dollar strength for 2nd day
* Euro zone debt worries prompted safe-haven buying
* Gold, silver volume steadies after volatile week
* Coming up: Traders await statement of G20 meeting
(Recasts, updates with closing prices, link to graphic)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Nov 11 (Reuters) - Gold rose on Thursday,
holding firm against a stronger dollar for a second straight
day, as escalating concerns over debt in some euro zone
economies prompted investors to buy both the metal and
greenback as safe havens.
Gold benefited as doubts about Ireland's ability to repay
its debts spread, and uncertainty ahead of a joint statement
from the G20 meeting, which highlighted deep divides on
currencies and trade imbalances among member countries.
Yields on 10-year Irish bonds rose well above 8 percent to
a record high over comparable German debt. Investors worried
the country wouldn't be able to cut spending as planned and may
require a bailout. The news sent the euro to a five-week trough
and the dollar sharply higher against a basket of currencies.
"Gold is resuming its role as a safe haven in times of
crisis as the situations in Ireland and some European countries
are getting worse. So, it has also been separating itself from
the euro lately because of the safe-haven play," said Donald
Selkin, chief market strategist at National Securities Corp.
Gold tends to fall when the dollar rises, as this erodes
the metal's appeal as an alternative investment, but in times
of extreme risk aversion both assets can benefit.
Silver prices inched up and volume relatively steadied
after setting a new record earlier this week, with open
interest showing a further decline on Wednesday when the U.S.
futures showed a 7 percent drop.
Spot gold <XAU=> fell 0.3 percent to $1,406.99 at 3:34 p.m.
EST (2034 GMT). Earlier in the session, it reached a high of
$1,417.80 an ounce, closing in on the record $1,424.10 set
earlier this week.
U.S. gold futures for December delivery <GCZ0> settled up
$4 at $1,403.30 an ounce.
Estimated COMEX gold volume at 3:30 p.m. was near 180,000
lots, largely in line with the 250-day average, preliminary
Reuters data showed, and Wednesday's open interest eased 1.2
percent from a record high of 650,764 lots set in the previous
session.
The dollar rose to a five-week high against the euro due to
worsening debt prblems in Ireland, overshadowing attempts at a
Group of 20 summit to ease tensions over currency and trade
policies. []
There are signs that the inverse link between gold and the
dollar index is weakening, as the hourly correlation between
the two has decreased to a -0.22 at 2000 GMT from a peak near
-0.9 earlier in session. (Graphic:
http://link.reuters.com/far94 )
VTB Capital analyst Andrey Kryuchenkov said that, while the
precious metal is susceptible in the short term to losses in
the dollar, in the longer run the increased focus on euro zone
debt issues were likely to be positive for gold.
"Now that we are clear on QE2 (the second round of U.S.
quantitative easing announced last week), the attention is back
on the euro zone debt troubles, which is bullish for gold
should risk aversion escalate from here," he said.
He said investors should watch "CDS spreads on Ireland/
Portugal, the Vix (U.S. volatility index), euro zone peripheral
yields spreads over the bund and naturally the dollar index,"
to gauge risk aversion among investors.
Irish and Portuguese debt premiums over German government
bonds hit new highs on Thursday, pushing up other peripheral
euro zone yields, as scepticism grew that Ireland could escape
a Greek-style financial bailout. []
SCRAP SELLING RISES
In Asia, traditionally a key region for gold consumption,
gold scrap selling increased after spot prices hit record
highs, though it fell short of meeting burgeoning demand.
[]
Among other precious metals, silver <XAG=> rose 1.5 percent
to $27.60 an ounce. Holdings of the iShares Silver Trust <SLV>,
the world's largest silver exchange-traded fund, rose 3.4
percent to a record 10,718.82 tonnes by Nov. 10, and now
traders eagerly waited to see if holdings could drop sharply
after the sharp liquidation.
The ratio of gold to silver -- the number of ounces of
silver needed to buy an ounce of gold -- slipped back toward
the 2-1/2 year low near 50 it reached earlier this week.
(Graphic of gold-silver ratio: http://link.reuters.com/heq94q)
Platinum <XPT=> rose 0.8 percent to $1,749.49 an ounce,
while palladium <XPD=> climbed 1.3 percent to $707.72.
Prices at 3:41 p.m. EST (2041 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1403.30 4.00 0.3% 28.0%
US silver <SIZ0> 27.405 0.540 0.0% 62.7%
US platinum <PLF1> 1745.80 7.90 0.5% 18.7%
US palladium <PAZ0> 704.15 7.40 1.1% 72.2%
Gold <XAU=> 1407.15 4.45 0.3% 28.3%
Silver <XAG=> 27.59 0.39 1.4% 63.8%
Platinum <XPT=> 1750.50 14.51 0.8% 19.4%
Palladium <XPD=> 707.72 8.72 1.2% 74.5%
Gold Fix <XAUFIX=> 1398.50 -14.50 -1.0% 26.7%
Silver Fix <XAGFIX=> 27.75 22.00 0.8% 63.3%
Platinum Fix <XPTFIX=> 1754.00 11.00 0.6% 19.6%
Palladium Fix <XPDFIX=> 715.00 1.00 0.1% 77.9%
(Reporting by Frank Tang and Jan Harvey; Editing by Lisa
Shumaker)
