* Gold pares gains as euro retreats from highs vs dollar
* EU president says deal reached to provide aid to Greece
* Chinese gold buying firm ahead of New Year holiday
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, Feb 11 (Reuters) - Gold retreated from the highs on
Thursday as the euro fell versus the dollar, but was underpinned
by strength in other commodities after European leaders reached
a deal to bail out debt-laden Greece.
The euro hit a session high versus the dollar after the EU
president said a deal to help Greece had been reached, sending
gold to a session high at $1,086.40. However, the single
currency later declined as further details of the plan emerged.
Spot gold <XAU=> was bid at $1,075.85 an ounce at 1446 GMT,
against $1,071.55 late in New York on Wednesday. U.S. gold
futures for April delivery <GCJ0> on the COMEX division of the
New York Mercantile Exchange rose 60 cents to $1,076.40.
"Yesterday's performance of gold was rather remarkable. It
held the lows of $1,063 very well and it bounced back up ahead
of the uncertainties in the euro zone," said Afshin Nabavi, head
of trading at MKS Finance in Geneva.
"We are trading between $1,065/1,085. A break above $1,085
should send us up towards the $1,100 level," he added. "But we
are seeing a very choppy market in all."
European leaders struck a deal to provide financial aid to
Greece on Thursday, though details of the package were not
expected to be finalised until EU finance ministers meet early
next week. []
The euro dropped to session lows against the dollar, U.S.
stocks opened in negative territory and European shares hit a
session low in afternoon trading as the market sought more
details of the aid package. [] [] []
With jewellery demand still relatively soft, the market is
heavily dependent on investment demand, which is chiefly
dependent on currency moves, for direction.
"Investment demand is likely to be the wild card, and we
think once the dollar starts weakening again, which is our view
ultimately, then gold should resume its longer-term uptrend,"
said Tobias Merath, head of research at Credit Suisse.
"But for February and March, we think consolidation and some
downside risks are due," he added. "The gold market could test
$1,000 mark and even drop below that, but we would consider that
an entry point for longer-term investors."
COMMODITIES CLIMB
Strength in other commodities helped support gold. Oil
prices climbed towards $75 a barrel, copper rose nearly 3
percent and other industrial metals strengthened on Thursday as
European leaders reached a deal on Greece. [] []
On the physical markets, analysts reported good demand for
gold in Asia ahead of the Chinese New Year holiday. Holdings of
the world's largest gold-backed exchange-traded fund, the SPDR
Gold Trust <GLD>, were steady on Wednesday. []
On the supply side, South Africa's statistics office said
gold mine output fell 8.8 percent in December in volume terms.
The republic was the world's third-largest mine producer in 2008
with output of 233.3 tonnes. []
But South Africa's fourth-biggest gold producer, DRDGOLD
<DRDJ.J>, reported a 4 percent rise in gold output for the
quarter to December and a return to profit owing to lower
operating costs. []
Silver <XAG=> was at $15.18 an ounce against $15.18.
Platinum <XPT=> was at $1,492 an ounce against $1,507, and
palladium <XPD=> at $410.50 against $411.50.
Aquarius Platinum <AQP.AX> said in a conference call it sees
attributable platinum group metals production at 445,000-450,000
ounces this year. []
Constraints on platinum output from South Africa this year
are a potential support to prices. South Africa is the source of
four out of five ounces of mined platinum supply.
(Editing by William Hardy)
