(Corrects first paragraph to six-week low instead of
six-month low)
* Euro breaks down to new 10-month low versus dollar
* Trichet comments on Greece bail out send euro lower
* Traders report fresh physical buying as prices fall
(Recasts, updates prices, market activity to New York close;
changes byline, dateline, previously LONDON)
By Carole Vaporean
NEW YORK, March 25 (Reuters) - Gold posted moderate
increases on Thursday, as investors saw a buying opportunity
the day after the precious metal slid to a six-week low.
Gold trade was choppy. The market slid briefly with the
euro on comments by the European Central Bank chief about a
potential bailout of Greece. It then drew support from
relatively firm equities and oil markets.
Gyrations in the euro, oil and U.S. equity prices batted
gold around unchanged readings for much of the session, with
options expirations contributing to futures price volatility.
Spot gold <XAU=> stood higher at $1,094.25 an ounce by 3:00
p.m. EDT (1900 GMT) against $1,086.50 late in New York on
Wednesday. U.S. gold futures for April delivery <GCJ0> on the
COMEX division of the New York Mercantile Exchange COMEX April
ended $4.10 stronger at $1,092.90 an ounce.
Traders also noted stronger physical demand for bullion
after the recent price drop, especially in India.
Just before COMEX gold closed, European Central Bank
President Jean-Claude Trichet's comments about Greece's debt
problems triggered euro selling that briefly pressured gold.
The euro renewed its descent to a 10-month low against the
dollar after Trichet, ahead a European Union summit, said it
would reflect negatively on Europe's ability to handle its
problems if the IMF took the lead in aiding Greece []
[]
In a commentary for Frankfurter Allgemeine Zeitung, Trichet
said it was in countries' own interests to put their public
finances back on solid footing. []
Renewed selling of the euro weighed on gold, but some
investors saw price dips as a buying opportunity.
"It's really been a back and forth movement. But after
Trichet made those comments gold came under renewed pressure
after the dollar rallied and the euro broke down," said David
Meger, vice president and director of metals trading at Vision
Financial Markets in Chicago.
U.S. stocks rose in early trade, which helped gold retain a
firmer footing, said Meger. Wall Street closed flat, but by
then gold had already settled. []
U.S. crude futures slipped late, settling slightly lower,
when the euro weakened against the dollar following Trichet's
comment's. But crude was also higher at the time gold futures
trading ended. []
Gold "has held up pretty well during this recent dollar
rally but I suppose again it is due to the two factors pulling
it -- sovereign debt worries against a stronger dollar," said
Ole Hansen, senior manager at Saxo Bank.
The precious metal has also met with good buying interest
on the physical side as prices fell, traders said.
Dealers reported physical demand for gold in India, the
world's biggest bullion consumer, rose after prices fell to
attractive levels, as traders resumed buying to stock up for
the wedding season that begins in April. []
"We are still seeing safe-haven buying of small coins and
bars, and as prices drop we see good physical demand in
general, which is absorbing some selling in the market," said
Commerzbank senior trader Michael Kempinski.
Silver <XAG=> tracked gold higher, trading at $16.68 an
ounce from $16.57 late in the prior session.
Precious metals participants also kept an eye on the CFTC
public hearing on futures and options in metals in Washington.
Click for comments from participants: []
The top U.S. futures market regulators heard protests from
exchanges and traders who said limiting metals speculation
could harm markets. Others questioned whether the agency has
the authority to impose such restrictions. []
Platinum <XPT=> was higher at $1,605.50 an ounce against
$1,577, while palladium <XPD=> was at $451 against $442.50.
Both platinum group metals have taken support from
expectations for a recovery in car demand this year. Both are
used in autocatalysts.
(Additional reporting by Jan Harvey in London, Editing by
David Gregorio)
