* Gold holds firm as dollar wilts
* Silver prone to more losses
* Coming up: U.S. NAHB housing market index; 1500 GMT
(Updates throughout; refreshes prices; previous SINGAPORE)
By Amanda Cooper
LONDON, Jan 18 (Reuters) - Gold rose for a second day on
Tuesday, buoyed by a fall in the dollar and a stream of demand
from key Asian consumers, along with a degree of uncertainty
over a permanent resolution to Europe's debt crisis.
Gold has fallen by more than 3 percent this month, under
pressure from investors eager to cash in on the 30-percent price
gain of 2010 and also from a waning need for safe-haven assets
as data paints a picture of a more robust global economy.
The dollar extended losses against the euro <EUR=> after a
measure of German business confidence hit its highest since
July, outstripping expectations. []
Spot gold <XAU=> rose 0.4 percent to $1,367.75 an ounce by
1035 GMT, while U.S. February gold futures <GCG1> rose 0.5
percent to $1,367.80.
In light of the stronger data and expectations for robust
fourth-quarter U.S. earnings, gold could encounter more pressure
and Societe Generale analyst David Wilson said ultimately
monetary policy in the United States would be the deciding
factor in the direction of the bullion price.
"It really all depends on whether (Federal Reserve Chairman
Ben) Bernanke gets his way and there is further quantitative
easing, which is still being talked about," Wilson said.
"If there is further quantitative easing there would be more
upward support for gold."
The Federal Reserve's $600 billion bond-buying programme to
stimulate economic growth in the United States has ignited
concern about an unwelcome pickup in inflationary pressures and
a broad-based decline in the dollar, both of which would prove
beneficial to gold.
EURO FIRM
Meanwhile, euro zone finance ministers have decided to take
their time over reinforcing the currency area's rescue fund,
while debt-stricken Greece denied a minister's comment that it
should stretch out all its debt repayments. []
Yet the euro remained firm, pushing euro-priced gold
<XAUEUR=R> near 1-1/2 month lows around 1,020 euros an ounce.
"The debt crisis bubbles up and then pulls back and, at the
moment, it's on the backburner again and not really seen as a
major issue," Wilson said.
This week's U.S. banks earnings, expected to be strong,
could give investors more reason to be optimistic about the
sector and the economy in general. []
Reflecting the improved consumer appetite for gold in Asia,
premiums for gold bars rose on Monday to hit another two-year
high as jewellers from China rushed to buy ahead of the Lunar
New Year, while purchases from the electronics sector helped
stir up physical trading in Japan, dealers said. []
"We will see quite a bit of bargain hunting if price dips
below $1,360. Prices are unlikely to drop much, because the
physical demand ahead of the Lunar New Year will help support
the prices," said Li Ning, an analyst at Shanghai CIFCO Futures.
Spot silver <XAG=> rose by nearly 2 percent to $28.73 an
ounce, yet after 2010's 80-percent gain, investors have punished
silver more harshly than gold, bringing the losses for the month
so far to about 8 percent and analysts expect more declines.
"... we are at a loss to explain silver's relative and
absolute price surge from a fundamental standpoint. Accordingly,
we expect silver to be a slight underperformer in the current
year," wrote Swiss commodity fund manager Tiberius in a monthly
report.
In the platinum group metals, palladium <XPD=> gained
another 1.4 percent to reach $801.65 an ounce, pushing the price
close to last week's ten-year highs, while platinum <XPT=> was
last up about 1 percent at $1,816.25.
(Additional reporting by Rujun Shen in Singapore; editing by
James Jukwey)
