* Portugal, euro zone debt spur safe-haven demand
* China's premiums for gold bars jump to 2-year high
* Coming up: US producer prices, jobless claims Thurs.
(Recasts, updates prices; changes byline, dateline, previously
LONDON)
By Frank Tang
NEW YORK, Jan 11 (Reuters) - Gold prices rose for a second
day on Tuesday as deepening worries over the severity of the
European debt crisis prompted safe-haven buying.
Japan promised to buy euro zone bonds this month, a day
after China renewed its commitment to buy Spanish debt,
highlighting Europe's ongoing struggle with a seething debt
crisis. []
"The market is able to rally, despite the fact the euro is
still weak, and that is evidence that the safe-haven demand for
gold has eclipsed the weakness in the euro, because they've
both reacted to the sovereign debt crisis," said James Steel,
chief commodity analyst at HSBC.
The euro wiped out earlier losses to rise modestly against
the dollar, with traders citing talk of increased Portuguese
bond buying by the European Central Bank as helping lift the
currency, sending gold off its highs. []
Spot gold <XAU=> rose 0.3 percent to $1,378.66 at 12:18
p.m. EST (1718 GMT). U.S. gold futures for February delivery
<GCG1> climbed $4.60 to $1,378.70. The metal is about 4 percent
off December's record high of $1,430.95.
Gold notched its biggest weekly decline since May last
week, which has spurred demand in India and China, a top
bullion consumer ahead of the Lunar New Year in early February,
pushing premiums for gold bars to their highest in two years.
[]
China's inflation raced to a 28-month high of 5.1 percent
in November, and it's not clear whether policy steps the
government is taking will calm prices, benefiting gold.
After several weeks of almost unrelenting outflows, some of
the larger exchange-traded funds backed by physical gold have
also seen a pick-up in investor demand, in spite of the decline
in the euro, which would normally erode appetite for gold.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings rose for the first time
since mid-December to 1,272.682 tonnes by Jan. 10. []
EURO ZONE DEBT CRISIS
Concerns in the fixed-income markets over the likelihood of
an international bailout for Portugal, which would be the third
in a year after the rescues of Greece and Ireland, have
undermined investor confidence and given gold a boost.
The focus this week is on whether Lisbon will be able to
raise funds in the debt market on Wednesday, or be forced to
turn to the European Union and International Monetary Fund for
financial aid.
Gold, which rose by 30 percent last year, was a key
beneficiary of investor concern over the fallout from the euro
zone debt crisis.
"Where you have governments that are overindebted and need
to get themselves out of that problem ... they can try to
inflate their way out of difficulty, which is where you'd want
to be holding gold instead, or can go down a route of fiscal
retrenchment," said Natixis commodities analyst Nic Brown.
Gold priced in euros <XAUEUR=R> extended gains, rising 0.2
percent to 1,063.84 euros an ounce, notching up a fifth
consecutive session of price rises.
Silver <XAG=> rose for a second session, up 1.3 percent on
the day at $29.44 an ounce.
Improved U.S. auto sales and ongoing supply worries lifted
platinum group metals, which are largely consumed as
autocatalysts.
Platinum <XPT=> rose for a fourth consecutive day, up 1.3
percent at $1,760.74 an ounce, while palladium <XPD=> rose 3.9
percent, up for a second day, at $779.47.
(Additional reporting by Amanda Cooper in London and Lewa
Pardomuan in Singapore; Editing by Walter Bagley)
Prices at 12:34 p.m. EST (1734 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCG1> 1378.80 4.70 0.3% -3.0%
US silver <SIH1> 29.520 0.659 2.3% -4.6%
US platinum <PLJ1> 1768.00 22.90 1.3% -0.6%
US palladium <PAH1> 783.00 33.35 4.5% -2.5%
Gold <XAU=> 1378.60 4.15 0.3% -2.9%
Silver <XAG=> 29.49 0.44 1.5% -4.4%
Platinum <XPT=> 1761.74 23.75 1.3% -0.4%
Palladium <XPD=> 779.47 29.50 3.9% -2.5%
Gold Fix <XAUFIX=> 1374.00 -7.00 -0.5% -2.6%
Silver Fix <XAGFIX=> 29.54 75.00 2.6% -3.6%
Platinum Fix <XPTFIX=> 1758.00 10.00 0.6% 1.6%
Palladium Fix <XPDFIX=> 778.00 16.00 2.1% -1.6%
