* Gold touches two-week high near $1,125/oz
* Breach of technical resistance levels prompts buying
* Gold miners target higher output in 2010
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Feb 3 (Reuters) - Gold prices rose 1 percent to a
two-week high in Europe on Wednesday as the dollar extended
losses versus the euro, pushing the precious metal through key
technical levels and prompting an inflow of fresh funds.
Spot gold <XAU=> hit a peak of $1,124.65 and was bid at
$1,121.40 an ounce at 0944 GMT, against $1,113.95 late on
Tuesday. U.S. gold futures for February delivery <GCG0> were up
$3.90 to $1,121.30 an ounce.
Commodities were higher across the board as appetite for
assets seen as higher risk was sharpened by well-received U.S.
economic data and a bounce-back in equity markets.
"The recovery we have seen this week in stock markets, and
the euro recouping losses it suffered last week is a positive
environment for the metals market," said Peter Fertig, a
consultant at Quantitative Commodity Research.
"A weaker U.S. dollar also implies that institutional
investors are returning to the market," he added.
A slight rebound in risk appetite lifted the euro versus the
U.S. dollar on Wednesday in cautious trade before the EU's
verdict on Greece's fiscal plan. []
Traders are also awaiting key U.S. non-farm payrolls data
and interest rate decisions from the European Central Bank and
the Bank of England due later this week, analysts said.
"Much will depend on how the market reacts to macro data
later in the week and if risk sentiment improves across the
board," said Andrey Kryuchenkov, an analyst at VTB Capital.
"Gold is still trading alongside other metals and equity
markets... in an opposite direction to the U.S. currency."
On the investment side, holdings of the world's largest gold
exchange-traded fund, the SPDR Gold Trust <GLD>, were unchanged
for a tenth session after outflows of 21.7 tonnes in January.
CHARTISTS EYE RESISTANCE ABOVE $1,130/OZ
Analysts who study charts of past price movements as an
indicator of future moves said the metal had taken good support
from technical factors after recovering from last week's slide.
Weakness in the dollar prompted buying which pushed prices
through key resistance levels, sparking further gains.
"Spot gold found support at $1,073.85, right at the December
$1,074 key support level," technical analysts at Commerzbank
said in a weekly report released on Wednesday. "The current
bounce off this level did thus not come as a surprise to us."
They said gold was likely to meet tough resistance just
above $1,130 an ounce, but added a breach of this level could
see the metal revisit the $1,150 an ounce area.
On the supply side, Australia's third largest gold miner,
Resolute Mining <RSG.AX>, said on Wednesday it would expand gold
output by a quarter within the next three years to 500,000
ounces. Australia is the world's number four gold producer.
[]
Toronto-based Iamgold said it will lift its gold production
to about 1 million ounces in 2010 from 939,000 ounces last year,
while Russia's Highland Gold Mining <HGM.L> said it plans to
boost output by some 25 percent this year to 200-210,000 ounces.
[] []
Among other precious metals, silver <XAG=> was bid at $16.84
an ounce against $16.68. Platinum <XPT=> was bid at $1,583 an
ounce versus $1,576.50, while palladium <XPD=> was at $441.50
against $439.50.
U.S. auto sales rose 6 percent from a year earlier, powered
by revived purchases by rental car companies which had dropped
out of the market a year earlier due to tight credit and
concerns about a deepening slump in the economy. []
Carmakers are the biggest consumers of platinum group
metals, which are used in autocatalyst manufacturing. A slump in
car demand last year led platinum and palladium prices to
tumble.
(Editing by James Jukwey)
