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* Gold rises, euro debt crisis, physicals help
* Gold to retrace to $1,372/oz -technicals []
* Coming Up: U.S. Federal budget, Dec; 1900 GMT
(Adds details, quotes)
By Lewa Pardomuan
SINGAPORE, Jan 12 (Reuters) - Bullion edged up in thin
trade on Wednesday, with sentiment supported by high oil
prices, lingering worries about the severity of the European
debt crisis and a shortage of gold bars in Asia.
European finance ministers will discuss increasing the
effective lending capacity of their financial rescue fund next
week, EU sources said on Tuesday, as Portugal defied pressure
to seek a bailout. []
Spot gold rose $4.70 an ounce to $1,385.15 an ounce
by 0303 GMT. Despite safe haven buying related to the crisis
in the euro zone, bullion was well below a historical high of
around $1,430 struck in December.
But physical dealers said gold could rise further as
demand from jewellers and investors picked up in India and
China, leading to tighter stocks for gold bars in Singapore
and Hong Kong. Premiums for gold bars are at two-year highs.
"It's more on the upside. I think physical buying actually
provides good support," said Beh Hsia Wah, a dealer at United
Overseas Bank in Singapore. "I would say the physical support
is there and some buying is there."
Worries about inflation in China, the world's
second-largest gold consumer after India, drove investors to
gold, while purchases from jewellers also increased before the
Lunar New Year in February.
In India, jewellers stocked up ahead of the harvest season
in the middle of January. Gold imports in India are likely to
jump 64 percent to 500-550 tonnes in 2011, driven by
investment purchases that are likely to affect world prices.
[]
U.S. gold futures for February were steady at
$1,385 an ounce, having settled $10.2 higher on Tuesday.
"Buying from China and India put a floor on gold prices
but a strong dollar is likely to cap gold's gains for the time
being," said a dealer in Hong Kong.
"I think it's a matter of time before the problems in
Europe are solved. China and Japan may buy the bonds. Nobody
wants the problems in Europe to deteriorate further."
Gold may retrace slightly to $1,372 per ounce before
rebounding further to $1,392, based on its wave pattern and an
inverted head-and-shoulders pattern, according to Wang Tao, a
Reuters market analyst for commodities and energy technicals.
For a 24-hour gold technical outlook:
http://graphics.thomsonreuters.com/WT/20111201090530.jpg
The euro struggled to advance against the greenback early
in Asia on Wednesday after posting two straight days of gains,
with little upside potential seen in the short term as caution
set in ahead of debt sales from highly indebted euro zone
members.
Japan, following in the footsteps of China, promised to
buy euro zone bonds this month in a show of support for the
single currency area's struggle to overcome a seething debt
crisis that helped steady the euro .
But a respected former European Central Bank official,
Otmar Issing of Germany, warned that failure to use the crisis
to enforce Europe's budget rules more strictly could lead to
the eventual breakup of economic and monetary union.
In the energy market, U.S. oil prices steadied above $91
on Wednesday following a sharp rally the previous session,
supported by the shutdown of two North Sea oil fields and the
continued outage of a key Alaskan pipeline.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust , said its holdings slipped to 1,271.467
tonnes by Jan 11 from 1,272.682 tonnes on Jan 10.
Precious metals prices at 0303 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1385.15 4.70 +0.34 26.42
Spot Silver 29.71 0.21 +0.71 76.53
Spot Platinum 1774.25 8.26 +0.47 20.94
Spot Palladium 790.97 8.97 +1.15 95.06
TOCOM Gold 3718.00 31.00 +0.84 14.08 42712
TOCOM Platinum 4803.00 95.00 +2.02 9.63 21022
TOCOM Silver 79.80 1.80 +2.31 54.35 1537
TOCOM Palladium 2139.00 93.00 +4.55 83.61 857
Euro/Dollar 1.3000
Dollar/Yen 83.16
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Reporting by Lewa Pardomuan; Editing by Clarence Fernandez)
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