* Gold briefly climbs above $1,200 on broad asset rally
* Strong U.S. corporate earnings fuel commods, stocks, oil
* Gold/S&P correlation slightly positive since early June
* Coming up: European bank stress-test outcome due Friday
(Recasts, updates prices, adds comments, second byline,
dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, July 22 (Reuters) - Gold rose briefly
above $1,200 an ounce on Thursday as strong U.S. corporate
earnings fueled a cross-asset rally, and lingering sovereign
credit risk should provide underlying support to the metal.
Gold gained as the Dow rallied 200 points after bellwether
U.S. companies reported strong revenues, easing worries about
future growth. Crude oil <CLc1> and the Reuters/Jefferies CRB
index <.CRB> also jumped.
Gold, viewed as a safe haven during times of economic
uncertainty, had seen limited gains earlier this week as
financial markets anticipated that most euro zone banks would
pass stress tests on Friday. []
"The better European data really seems to change
psychology, and the excellent earnings numbers have created
amore positive economic outlook that is supportive of gold,"
said Bill O'Neill, partner of New Jersey-based commodities firm
LOGIC Advisors.
Gold has been largely moving in tandem with the equity
markets since early June, as the euro rallied on dissipating
fears about a European debt contagion. (Graphic:
http://link.reuters.com/hum98m)
Spot gold <XAU=> was at $1,194.35 an ounce at 12:41 p.m.
EDT (1641 GMT), up from $1,191.80 late in New York on
Wednesday. U.S. gold futures for August delivery <GCQ0> rose
$3.20 to $1,195 an ounce.
Gold traders will closely monitor Friday's stress test,
which will disclose holdings of doubtful government debt owned
by European banks. []
"There is no apparent trigger for gold to move higher at
the moment, especially with the situation in Europe a bit more
under control," said Bank of America-Merrill Lynch analyst
Michael Widmer. "Against that backdrop, we have been
drifting."
He said if bank stress test results reassure the market,
"it would have a more positive impact on the cyclical metals
like the base metals, and a less positive impact on gold."
Gold rose above $1,200 an ounce in early trade but quickly
slipped back below that level, after data showed sales of
previously owned U.S. homes hit a three-month low in June and
weekly jobless claims surged. []
U.S. stocks still jumped more than 2 percent based on
upbeat earnings, following Wednesday's sharp losses after
Federal Reserve Chairman Ben Bernanke said that the U.S.
economy faces "unusually uncertain" prospects.
Rising equities and better-than-expected European data
lifted appetite for risk, weighing on the dollar, which fell 1
percent against a basket of currencies <.DXY>. []
GOLD AWAITS DIRECTION
Gold is struggling for direction as formerly strong
concerns over debt levels retreat in the euro zone's Portugal,
Italy, Ireland, Greece and Spain.
Natixis said in a note that gold market has lost one of its
previously clear price signals because of economic uncertainty
related to Europe's sovereign credit risk.
Among other precious metals, silver <XAG=> was at $18.08 an
ounce against $17.77, platinum <XPT=> at $1,520.25 an ounce
against $1,521, and palladium <XPD=> at $452.95 against
$449.50.
The world's number three platinum producer Lonmin, which
operates in South Africa, said its third-quarter refined
platinum sales nearly halved following the closure of its main
furnace. []
Standard Chartered said in a note that it expects
constraints on South African supply to persist. Platinum group
metals output in April was weak, it said.
Prices at 12:56 p.m. EDT (1656 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCQ0> 1195.80 4.00 0.3% 9.1%
US silver <SIU0> 18.140 0.337 1.9% 7.7%
US platinum <PLV0> 1529.20 -0.60 0.0% 4.0%
US palladium <PAU0> 456.85 4.70 1.0% 11.7%
Gold <XAU=> 1195.60 3.80 0.3% 9.1%
Silver <XAG=> 18.10 0.33 1.9% 7.5%
Platinum <XPT=> 1523.50 2.50 0.2% 4.0%
Palladium <XPD=> 452.93 3.43 0.8% 11.7%
Gold Fix <XAUFIX=> 1199.50 12.50 1.1% 8.7%
Silver Fix <XAGFIX=> 17.82 -6.00 -0.3% 4.9%
Platinum Fix <XPTFIX=> 1519.00 1.00 0.1% 3.6%
Palladium Fix <XPDFIX=> 453.00 4.00 0.9% 12.7%
(Reporting by Frank Tang in New York and Jan Harvey in London;
Editing by David Gregorio)
