* Tensions run high in euro zone; Portuguese debt level eyed
* Euro recovers some lost ground but sentiment stays fragile
* Gold sales under CBGA total just 20.4 T in pact yr to date
(Updates prices, adds comment)
By Jan Harvey
LONDON, Dec 1 (Reuters) - Gold eased back below $1,390 an
ounce on Wednesday as some appetite for risk returned to the
European equity, debt and currency markets, but remained firmly
underpinned by persistent concerns over euro zone debt levels.
The precious metal also gave up gains in euro and sterling
terms, after hitting record highs in both currencies as
investors bought the metal as a safe store of value.
Spot gold <XAU=> was bid at $1,388.85 an ounce at 1405 GMT,
against $1,384.94 late in New York on Tuesday. U.S. gold futures
for December delivery <GCZ0> rose $4.20 an ounce to $1,389.20.
Euro-priced gold <XAUEUR=R> retreated after earlier hitting
a peak of 1,070.11 euros an ounce, an all-time high, while gold
in sterling <XAUGBP=R> also pared gains after touching a record
895.49 pounds an ounce.
The precious metal has made good gains this week in all
three currencies as investors fret over the chances of debt
problems that have afflicted Ireland and Greece this year
spreading to other parts of the euro zone, like Portugal.
These concerns have led to a broad-based move higher in gold
in a number of major currencies.
"Gold is like a see-saw on a hot air balloon," said
Mitsubishi Corp analyst Matthew Turner.
"Sometimes the euro end is rising relative to the dollar
end, at other times the dollar end is rising relative to the
euro end, but if you look around you realise that most of the
time both ends are rising in absolute terms."
The euro rebounded 1 percent against the dollar after the
last session's hefty losses, European shares moved higher and
German government bond futures -- often a safe-haven instrument
-- fell 1 point as some risk appetite retured to the European
markets. [] [] []
But sentiment towards the euro remained fragile in a market
waiting to see what policymakers will do next about debt.
"The recovery in euro has been subtle, with more losses
likely in the coming days, as the debt issues haven't abated
yet," said Richcomm Global Services analyst Pradeep Unni.
While a weaker euro and consequently stronger dollar would
usually weigh on the precious metal, both can rise in times of
extreme risk aversion, as both can be bought as a safe store of
value. This was most clearly seen in the second quarter of 2010.
TURKEY IMPORTS SLIP
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, rose 1.5 tonnes on
Tuesday to 1,286.603 tonnes. They dipped slightly in the month
of November, however. []
Meanwhile gold imports into Turkey slipped to just over 3
tonnes in November from around 9 tonnes in October, the Istanbul
Gold Exchange reported. []
On the supply side of the market, the World Gold Council
reported that bullion sales under the third Central Bank Gold
Agreement have totalled only 20.4 tonnes in the second year of
the pact so far, with the bulk of sales made by the
International Monetary Fund. []
The IMF is not a signatory of the pact, but it is currently
making a series of planned sales under its terms to avoid
disrupting the gold market.
Meanwhile, China's Ministry of Industry and Information
Technology said the world's biggest gold miner produced 28.735
tonnes of metal in October, 5.3 percent less than in September
but 9 percent more than in October 2009. []
Among other precious metals, silver <XAG=> was at $28.44 an
ounce against $28.05, while platinum <XPT=> was at $1,672.24 an
ounce versus $1,656 and palladium <XPD=> at $713.72 versus $696.
(Reporting by Jan Harvey; editing by Alison Birrane)
