* Gold gains from euro strength
* Coming Up: U.S. Chicago Fed index Oct; 1300 GMT
(Updates comment, prices, changes dateline from SINGAPORE)
By Amanda Cooper
LONDON, Nov 22 (Reuters) - Gold rallied for a third day on
Monday as the euro benefitted from Ireland's rescue deal at the
expense of the U.S. dollar, which broadly boosted investor
appetite for commodities.
European and IMF officials will begin working on the details
of a three-year bailout package for Ireland -- expected to total
80-90 billion euros ($109.4-$123.1 billion) --- to tackle its
banking and budget crisis.
The move, which officials hope will help stabilise financial
markets, boosted the euro, along with European equities. While
such reassurances undercut some of gold's safe-haven appeal, the
subsequent decline of the dollar fed demand for the metal.
Holdings of gold in the world's largest exchange-traded fund
rose for the first time in two weeks [], indicating
investors are delving back into precious metals.
Spot gold <XAU=> rose 0.5 percent to $1,360.55 an ounce by
1013 GMT, still over 4 percent below early November's record
high at $1,424.10 an ounce, but above last week's two-week
trough. U.S. gold futures for December delivery <GCZ0> rose $8.0
to $1,360.30.
"Safe-haven demand might be falling, but of course, this
strengthening of the euro against the U.S. dollar ... is
probably more important for the gold market," said Peter Fertig,
consultant at Quantitative Commodity Research.
CHINA IN FOCUS
A stronger euro helped offset worries about China's move to
tighten the economy. The People's Bank of China announced on
Friday it would increase required reserves by 50 basis points,
its fifth such announcement this year, in a fresh attempt to
keep a lid on inflation.[] []
China's steps to rein in inflation could dim gold's appeal
in the world's second-largest consumer after India, but dealers
said a drop in bullion prices from all-time high levels were
attracting purchases from other consumers in Asia.
"Asian people are still happy to buy gold. For the time
being, gold is neutral, trading on either side," said Ronald
Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding
that gold could fall if China did raise interest rates.
Gold prices fell by nearly 1 percent last week as the
certainty of a bailout for Ireland grew and rising U.S. Treasury
yields and stronger data supported the dollar <US2YT=RR>.
"Since investment demand continues to be strong and US bond
yields remain at a very low level, we would argue that prices
have further upside," said Credit Suisse analysts in a note.
"However, the uptrend is likely to be less steady in the
future as sentiment looks shaky," they said.
Reflecting the concern among some investors about the rise in
the gold price against a backdrop of an improving global
economy, HSBC Global Asset Management said late last week it had
cut its gold allocation in its Absolute Return Fund in half.
"We have ... taken the prudent course of action and halved
our position in gold bullion to 6 percent to reflect the fact
that we remain bullish over the long term but acknowledge that
gold has run ahead of itself at a time when the diversification
benefits have become less obvious," wrote fund manager Charlie
Morris in a note to clients.
Silver <XAG=> rose by more than 1 percent, rallying for a
fourth successive day, after holdings of metal in the world's
largest silver-backed ETF hit another record high.
Spot silver was last up at $27.50 an ounce, from $27.21 in
late trade in New York on Friday, having risen by nearly 10
percent in the last five trading days.
Platinum <XPT=> was last up 0.1 percent on the day at
$1,664.80 an ounce, while sister metal palladium <XPD=> was up
1.6 percent at $709.47 an ounce, set for a fourth consecutive
day of increases.
(Reporting by Amanda Cooper; editing by Sue Thomas)
