* Gold gains boosted by euro on Greece debt aid reports
* China's sovereign fund holds stake in SPDR gold ETF
* Price volatility seen rising on choppy FX, stock trades
(Recasts, updates prices, market activity, adds second byline,
dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Feb 9 (Reuters) - Gold climbed above
$1,070 an ounce on Tuesday, gaining 1 percent on improving
economic sentiment as the euro rose after reports of a possible
European bailout for debt-stricken Greece.
News that China's biggest sovereign wealth fund has
invested in gold also encouraged bullion investors.
Mihir Dange, a COMEX gold floor trader, said big moves in
the euro/dollar and the equities market could easily send gold
prices out of its trading range, increasing price volatility.
"Most of the trading right now is a short-covering rally.
Until it gets back above $1,100, we can't say for sure that we
are back into a bull market," Dange said.
Spot gold <XAU=> hit a session high of $1,083.05 an ounce
and was last at $1,076.10 an ounce at 2:52 p.m. EST (1952 GMT),
against $1,062.80 late in New York on Monday. Late last week it
fell to a three-month low at $1,043.75 as the euro tumbled.
U.S. gold futures for April delivery <GCJ0> on the COMEX
division of the New York Mercantile Exchange settled up $11 at
$1,077.20 an ounce.
The euro rose against the dollar, on track for its best
one-day gain since November, after Reuters reported that euro
zone governments have decided in principle to help Greece.
[]
However, a spokesman for the German government later said
reports that the euro zone has made a decision to aid Greece
were "unfounded."
"The market is looking for upside potential on euro-dollar
given the record short positions in the euro," said Saxo Bank
senior manager Ole Hansen. "Gold... is in a much stronger
position after the wash out on Friday."
News that European Central Bank President Jean-Claude
Trichet was leaving a meeting of central bankers in Sydney
early to attend a European Council meeting on Feb. 11 prompted
speculation a plan was being discussed. []
If these issues are successfully addressed, it is likely to
boost the euro, which in turn should help gold.
Analysts said the dollar, which has rallied due to
euro-zone's problems, may slip later in the year.
"The issue of sovereign risk, which is currently working in
the dollar's favor and against the euro and therefore gold,
could come back to haunt the dollar," HSBC said in a note.
CIC DISCLOSES STAKES IN GOLD
A Reuters poll on Tuesday found only a one in four chance
that Greece may have to seek a bailout this year to put its
public finances back on track. []
China Investment Corp [], the Asian giant's $300
billion sovereign wealth fund, said it had invested in the gold
sector, including a $155.6 million in New York's SPDR Gold
Trust. []
Among other precious metals, silver <XAG=> was at $15.40 an
ounce against $14.98, tracking gold higher. Platinum <XPT=> was
at $1,501.50 an ounce against $1,472, while palladium <XPD=>
was at $415 against $404.
News that the U.S. unit of ETF Securities Ltd. planning to
start a precious metals basket trust lifted investment demand
in platinum group metals. []
(Reporting by Frank Tang and Jan Harvey; Editing by David
Gregorio)
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1077.20 11 1.0 1096.20 -1.7
US silver <SIH0> 15.435 0.350 2.3 16.845 -8.4
US platinum <PLJ0> 1502.40 21.40 1.4 1471.00 2.1
US palladium <PAH0> 416.60 8.95 2.2 408.85 1.9
Prices at 2:52 p.m. EST (1952 GMT)
Gold <XAU=> 1076.00 13.20 1.2 1096.35 -1.9
Silver <XAG=> 15.39 0.41 2.7 16.84 -8.6
Platinum <XPT=> 1500.00 28.00 1.9 1465.50 2.4
Palladium <XPD=> 414.50 10.500 2.6 405.50 2.2
Gold Fix <XAUFIX=> 1071.25 3.25 0.3 1104 -3.0
Silver Fix <XAGFIX=> 15.20 6.00 0.4 16.99 -10.5
Platinum Fix <XPTFIX=> 1496.00 7.00 0.5 1466 2.0
Palladium Fix<XPDFIX=> 415.00 5.00 1.2 402 3.2
