* Gold rises on euro, watches Korea tensions
* Coming Up: Spain economy minister Campa; 0830 GMT
(Updates prices, adds activity in Japan)
By Lewa Pardomuan
SINGAPORE, Dec 20 (Reuters) - Gold rose around 1 percent
on Monday with investors chasing the precious metal as the
euro weakened against the dollar on concerns over euro zone
debt and Ireland's bailout package.
Tensions on the Korean peninsula offered additional
support following an artillery firing drill by the South
Korean military on a disputed island near the border with the
North. But dealers expect slow trading ahead as the year-end
nears.
Spot gold added $13.25 an ounce to $1,386.25 an
ounce by 0717 GMT after rising as high as $1,388.05 an ounce,
still well below an historical high around $1,430 hit earlier
this month.
U.S. gold futures for February rose $8.2 an ounce
to at $1,387.4 an ounce.
Bullion has risen as much as 30 percent this year.
"Last week's EU summit between policy makers did not
address investor concerns aggressively enough and this was
unable to really calm markets. Gold prices could be
underpinned by persistent euro zone debt concerns," said On
Yin Ling, investment analyst at Phillip Futures in Singapore.
"Perhaps we could see a new high in gold prices in 2011.
For this year, I think as we head towards the year-end,
investors may unwind positions and trading volume is coming
down."
The European Central Bank has expressed "serious concerns"
that Ireland's bailout package could affect the institution's
liquidity operations in the euro zone. []
The euro slid to a two-week low on Monday, looking
vulnerable to more losses against the dollar after breaching
chart support on Friday. It was within reach of support at
$1.3100-3090 , a entrancement level and its 200-day
moving average.
Some dealers in Hong Kong saw physical buying related to
the tensions on the Korean peninsula, which could escalate
into war.
The U.S. the U.S. envoy to the United Nations Susan Rice
said disagreements on the U.N. Security Council over the
crisis are so severe that it is unlikely they can be resolved.
[] []
But ANN, which has a team travelling with U.S.
troublshooter Bill Richardson, later reported that North Korea
has offered to allow U.N. nuclear inspections to resume
following talks in Pyongyang. []
"There's a little bit of buying by investors here. People
are cautiously bullish. People are still talking about high
inflation everywhere next year," said a dealer in Hong Kong.
"Gold will move upward, with upside target around $1,390,"
said the dealer, referring to a high seen last week.
There was a lack of activity in the physical market in
Japan despite escalating tensions in neighbouring South Korea.
Gold bars remained at a discount of 75 U.S. cents to the spot
London prices.
"I am afraid most Japanese people have little interest in
what's been happening next door," said a dealer in Tokyo, who
trades gold bars and coins to investors.
The world's largest gold-backed exchange-traded fund,
SPDR Gold Trust , said its holdings rose to 1,298.940
tonnes by Dec 17 from 1,283.757 tonnes on Dec 16. The holdings
hit a record at 1,320.436 tonnes on June 29.
iShares Silver Trust , the world's largest
silver-backed exchange-traded fund, said its holdings dropped
to 10,903.34 tonnes by Dec 17 from a record of 10,964.14
tonnes on Dec 14. For details of the ETF's silver holdings,
click on:
http://link.reuters.com/wux96h
Japan's Nikkei dropped 0.9 percent in thin trade on
Monday, with sentiment soured by a declining China market.
Precious metals prices at 0717 GMT
Metal Last Change Pct chg YTD pctchg Turnover
Spot Gold 1386.25 13.25 +0.97 26.52
Spot Silver 29.31 0.21 +0.72 74.15
Spot Platinum 1700.99 4.49 +0.26 15.95
Spot Palladium 739.00 2.00 +0.27 82.24
TOCOM Gold 3745.00 21.00 +0.56 14.91 37392
TOCOM Platinum 4645.00 8.00 +0.17 6.03 9052
TOCOM Silver 79.20 0.30 +0.38 53.19 1103
TOCOM Palladium 2016.00 -4.00 -0.20 73.05 278
Euro/Dollar 1.3156
Dollar/Yen 83.89
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Ed Lane)
