* Gold lifted by weaker dollar; euro cuts gains
* Strong Asian demand ahead of Lunar New year supports
* Silver outpaces gold's gains, still down 6 pct on month
* Coming up: U.S. Dec housing starts on Wednesday
(Recasts, updates prices, market activity to close, adds link
to graphic)
By Frank Tang
NEW YORK, Jan 18 (Reuters) - Gold rose on Tuesday as strong
Asian physical demand and a weaker dollar helped the precious
metal retrace some of this month's losses.
Customers in Asia have been buying gold at a price that
remains well off its record high above $1,430 an ounce, even as
other commodities such as crude oil, copper and grains are
trading near multi-year highs.
"Every time gold goes down, people see it as a buying
opportunity, and there is a lot of good physical buying from
Asia coming into the market place," said Miguel Perez-Santalla,
vice president of sales at Heraeus Precious Metals Management.
Bullion has fallen more than 3 percent in January, on track
for its biggest monthly decline since July. Gold rose 30
percent in 2010, but demand for safe-haven assets has waned
this month on an outlook for a more robust global economy.
Premiums for Asian gold bars rose to hit another two-year
high on Monday as jewelers from China rushed to buy ahead of
the Lunar New Year in early February. []
On Tuesday, gold benefited from a lower dollar against the
euro on buying by sovereign funds and strong German data but
doubts Europe can boost a rescue fund to head off debt problems
may prevent further gains of the single currency. []
The inverse correlation between gold and the dollar broke
down last week as successful European bond sales lifted the
euro against the dollar while reducing safe-haven demand for
bullion.
Spot gold <XAU=> rose 0.2 percent to $1,367.80 an ounce by
3:19 p.m. EST (2019 GMT), while U.S. February gold futures
<GCG1> gained $7 percent to $1,367.50.
Spot silver <XAG=> rose 1.7 percent to $28.75 an ounce. But
analysts expected more declines for silver, which has dropped
more sharply than gold this month after an 80-percent gain last
year. Silver is down about 6 percent so far in January.
Turnover in U.S. gold futures totaled about 180,000 lots,
15 percent above the 30-day average, but volume in COMEX silver
was 4 percent lower, preliminary Reuters data showed.
The gold-to-silver ratio -- the number of ounces of silver
needed to buy an ounce of gold -- fell on Tuesday but held near
a one-month high at just below 48, showing that silver is
outperforming gold.
Bullion started 2011 with its biggest two-week loss in
nearly a year, after China tightened bank reserves to rein in
inflation and as safe-haven demand faded.
Some analysts said negative factors such as recent outflow
in gold exchange traded funds and liquidation in U.S. futures
should not be overlooked despite gold's rise on Tuesday.
Tom Pawlicki, precious metals and energy analyst at MF
Global, said the latest CFTC's Commitment of Traders report,
which showed that noncommercial net longs, or speculators,
declined over 12 percent last week, indicated a large fund
might have exited the market.
Pawlicki said that the February gold contract's 50-day
moving average at $1,385 and a bearish head-and-shoulder top
pattern could represent strong technical resistance in the near
term. (Graphic: http://link.reuters.com/wyb96r )
DOLLAR LINK ERODES
Gold, which usually benefits from any decline in the
dollar, has declined this month even as the dollar index <.DXY>
has fallen by nearly half a percent since the start of the
year.
"There was a divergence and the euro/dollar is not trading
tick-for-tick with gold. Right now they are separate stories,
said Heraeus' Perez-Santalla.
In the platinum group metals, palladium <XPD=> gained 2.5
percent to $809.72 an ounce, near last week's ten-year highs,
while platinum <XPT=> climbed 1.3 percent at $1,822.50.
Prices at 3:06 p.m. EST (2006 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCG1> 1368.20 7.70 0.6% -3.7%
US silver <SIH1> 28.912 0.592 0.0% -6.5%
US platinum <PLJ1> 1823.50 10.10 0.6% 2.5%
US palladium <PAH1> 810.45 19.95 2.5% 0.9%
Gold <XAU=> 1365.47 3.07 0.2% -3.8%
Silver <XAG=> 28.81 0.55 1.9% -6.6%
Platinum <XPT=> 1820.99 22.14 1.2% 3.0%
Palladium <XPD=> 810.72 20.39 2.6% 1.4%
Gold Fix <XAUFIX=> 1369.50 0.75 0.1% -2.9%
Silver Fix <XAGFIX=> 28.79 60.00 2.1% -6.0%
Platinum Fix <XPTFIX=> 1824.00 1.00 0.1% 5.4%
Palladium Fix <XPDFIX=> 805.00 1.00 0.1% 1.8%
(Additional reporting by Amanda Cooper in London and Rujun
Shen in Singapore; Editing by David Gregorio)
