* Ireland requests aid; peripheral worries remain
* Euro sheds early gains versus dollar
* Holdings of silver in largest silver ETF hit record
(Recasts, updates with comments, market activity, adds
double dateline/byline)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, Nov 22 (Reuters) - Gold was little changed
on Monday as optimism over Ireland's request for financial aid
was overtaken by concern about possible contagion to other euro
zone nation, weighing on the euro.
The pick-up in the dollar against a weaker euro undermined
demand from investors for perceived safe-haven assets such as
gold, which tends to struggle if the U.S. currency strengthens.
[]
"Obviously, there are concerns about weakness of the Irish
government, but above and beyond that, what's weighing on gold
is the U.S. dollar, which has strengthened," said Peter
Buchanan, senior economist of CIBC World Markets.
Ireland's unpopular coalition government was near breaking
point amid calls for an election, as European and IMF officials
began thrashing out details of a rescue package for the
debt-stricken country -- expected to total 80 to 90 billion
euros -- on Monday. []
Buchanan, however, said that falling 10-year U.S. Treasury
yield provided underlying support for non-interesting bearing
assets such as gold. []
U.S. yields have risen recently amid a broad unwind of long
positions that were taken ahead of the Fed's bond-buyback
announcement on Nov. 3. Rising yields, a proxy of U.S. interest
rates, usually weigh on gold.
Spot gold <XAU=> was up 0.1 percent at $1,355.20 an ounce
at 12:06 a.m. EDT (1706 GMT), having earlier risen almost 1
percent to a high of $1,364.55. U.S. gold futures for December
delivery <GCZ0> rose $2.50 to $1,354.80.
Back in May, when the problems surrounding the euro zone's
debt burden became apparent, gold's traditional link to the
U.S. dollar broke down as investors sought an alternative to
the euro, although the same phenomenon has not materialized
with this recent resurgence of concern over Europe's finances.
"(Gold has) come down a bit on the Irish news, the euro has
come down. It's not really huge moves, it's because traders are
uncertain whether the bailout will be a success," said Matthew
Turner, an analyst with Mitsubishi.
"There are two things -- will the bailout be a success and
how will gold prices react if it is ... It could go either
way."
Risk aversion alone does not always drive investors into
precious metals, especially if the broader commodities complex
comes under pressure, sweeping bullion lower in the process, as
has been the case in the last three weeks. <.CRB>
Holdings of gold in the world's largest exchange-traded
fund rose for the first time in two weeks, indicating investors
were delving back into precious metals, albeit cautiously.
[]
US SPEC LONGS DROP
While holdings of metal in ETFs rose last week, speculators
cut their holdings of gold futures, according to data from the
U.S. Commodity Futures Trading Commission last week.
Total open interest in gold futures held by non-commercial
players, or spec longs, which many in the market use as a gauge
of speculative activity, staged its largest weekly fall since
late July and has fallen in five out of the past six weeks.
"Much of the short-term froth is now dissolved -
particularly from the gold market - but that doesn't mean the
stage is set for a re-run of fresh highs," said UBS precious
metals strategist Edel Tully.
"With Thanksgiving approaching, U.S. investors in
particular may be inclined to reduce risk positions over the
holiday period," she added.
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 HSBC fund manager
Charlie Morris in a note to clients.
Silver <XAG=> rose 1.3 percent to $27.55 an ounce, rallying
for a fourth successive day, after holdings of metal in the
world's largest silver-backed ETF hit another record high.
[]
Spot silver has risen by nearly 9 percent in the last five
trading days on speculative buying after following a sell-off
after U.S. commodity exchange CME Group <CME.O> rose silver
margins sharply to reduce market volatility.
Platinum <XPT=> slipped 0.7 percent on the day at $1,650.74
an ounce, while sister metal palladium <XPD=> fell 2.1 percent
to $683.95 an ounce.
Prices at 12:13 p.m. EST (1713 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1354.50 2.30 0.2% 23.6%
US silver <SIZ0> 27.530 0.351 1.3% 63.4%
US platinum <PLF1> 1654.30 -16.80 -1.0% 12.5%
US palladium <PAZ0> 687.80 -15.90 -2.3% 68.2%
Gold <XAU=> 1354.30 0.70 0.1% 23.6%
Silver <XAG=> 27.52 0.32 1.2% 63.5%
Platinum <XPT=> 1649.24 -13.76 -0.8% 12.5%
Palladium <XPD=> 684.22 -14.11 -2.0% 68.7%
Gold Fix <XAUFIX=> 1356.50 -1.00 -0.1% 22.9%
Silver Fix <XAGFIX=> 27.42 35.00 1.3% 61.4%
Platinum Fix <XPTFIX=> 1657.00 9.00 0.5% 13.0%
Palladium Fix <XPDFIX=> 700.00 10.00 1.4% 74.1%
(Reporting by Frank Tang;editing by Sofina Mirza-Reid)
