* Safe-haven buying on euro slump after Ireland bailout
* IMF's gold sales slowed 40 pct in Oct. vs Sept.
* Some say bearish head-and-shoulders chart pattern looms
* Coming up: US ADP private-sector employment data on Wed.
(Adds IMF October gold sales details in 7th paragraph)
By Frank Tang
NEW YORK, Nov 29 (Reuters) - Gold rose on Monday after
falling in the last two sessions, as worries about a widening
European sovereign debt crisis and a sharp decline in the euro
prompted safe-haven buying.
Bullion climbed as the euro slumped to two-month lows
against the dollar and Swiss franc as a rescue package for
Ireland failed to soothe worries other debt-stricken euro zone
members may also seek bailouts. []
With risk aversion running high, the typical inverse link
to the dollar collapsed, with the 25-day gold/dollar
correlation at its weakest in a month. (Graphic:
http://link.reuters.com/sud67q)
Investors fear Portugal may be the next country that
struggles with its sovereign debt after Ireland joined Greece
in seeking a bailout from the European Union. []
"You have seen moves in the currency markets that are
offsetting, to an extent, the sovereign concerns," RBS Global
Banking & Markets analyst Daniel Major said.
"The stronger dollar ... has clearly put pressure on gold,
and offsetting that you have people looking towards gold as a
hedge against potential devaluation of currencies, and debt
levels, and potential defaults," Major said.
In the official sector, the International Monetary Fund
slowed its gold sales by 40 percent in October from the
previous month, as central banks' interest in owning the metal
increased as a hedge against economic uncertainty.
[]
Spot gold <XAU=> climbed 0.3 percent to $1,365.15 an ounce
by 1:57 p.m. EST (1857 GMT), poised to snap a two-day losing
streak.
U.S. December gold futures <GCZ0> settled up $3.60 at
$1,366. COMEX volume looked about 15 percent above the 30-day
average, as futures investors rolled over to February contracts
from December futures ahead of December's first-notice day on
Tuesday.
Some analysts pointed to a potential head-and-shoulder
pattern as a bearish technical explanation for why gold did not
rally strongly on concerns about the fiscal health of euro zone
economies and rising tensions on the Korean peninsula.
However, Adam Hewison, president of MarketClub.com, said
the trend of the MACD momentum indicator model is "really
starting to turn up" on gold charts, and the fact that the MACD
came down from an oversold level suggests the odds for a
bearish head-and-shoulder move are low.
"If we see a little more strength today or tomorrow, we
will see that bullish MACD crossover. I think that could be the
first indication that we'll see another good viable move to the
upside," Hewison said.
WIDENING EURO ZONE CRISIS?
Safe-haven demand continued to support gold on doubts that
the EU has done enough to prevent debt problems from spreading
to other euro zone members such as Portugal and Spain,
something left unresolved after Greece was bailed out in May.
[]
"Portugal is the next interesting (story)," said Michael
Widmer, an analyst at Bank of America-Merrill Lynch.
Widmer said reports suggested authorities from the core
countries in the union were trying to pressure Portugal to
apply for a bailout from a European rescue fund.
Gold is likely to benefit if another EU member needs to be
rescued.
Under pressure to take dramatic action to arrest a systemic
threat to the euro, the 27 EU finance ministers approved the
broad outlines of a permanent crisis-resolution mechanism, to
be called the European Stability Mechanism. []
In addition, EU finance ministers on Sunday endorsed a
bailout package to help Dublin cover bank debts and bridge a
budget deficit. []
UBS analyst Edel Tully said in a note that the brokerage's
physical gold sales to top bullion consumer India last Friday
were the largest since Oct. 27, when gold prices slipped.
"This is a strong indicator that there's much residual
physical demand in the system that will provide ample support
on dips," Tully added.
On the supply side of the gold 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. []
Silver <XAG=> rose 1.8 percent to $27.13 an ounce. 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. []
Similarly, COMEX silver volume exceeded 127,000 lots, one
of the most active days on record, as investors rolled over to
March from December contracts ahead of first-notice day.
Prices at 2:09 p.m. EST (1909 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1366.00 3.60 0.3% 24.6%
US silver <SIZ0> 27.148 0.449 0.0% 61.2%
US platinum <PLF1> 1644.60 -0.60 0.0% 11.8%
US palladium <PAZ0> 693.00 16.50 2.4% 69.5%
Gold <XAU=> 1365.60 3.87 0.3% 24.6%
Silver <XAG=> 27.13 0.47 1.8% 61.1%
Platinum <XPT=> 1635.74 -9.26 -0.6% 11.6%
Palladium <XPD=> 686.50 12.50 1.9% 69.3%
Gold Fix <XAUFIX=> 1357.00 -3.00 -0.2% 22.9%
Silver Fix <XAGFIX=> 26.74 12.00 0.5% 57.4%
Platinum Fix <XPTFIX=> 1636.00 19.00 1.1% 11.6%
Palladium Fix <XPDFIX=> 680.00 8.00 1.2% 69.2%
(Additional reporting by Jan Harvey in London; Editing by
Alden Bentley and Dale Hudson)
