* Strong manufacturing, housing data prompt profit-taking
* Gold poised for gains as euro zone debt fears rankle
* Silver, palladium reach multi-year highs
* Coming up: U.S. auto sales due Tuesday
(Recasts, adds comments, updates prices, changes
byline/dateline, previously LONDON)
By Frank Tang
NEW YORK, Jan 3 (Reuters) - Gold was little changed on
Monday after rising to within $10 of its record high, and
silver and palladium hit multi-year peaks, driven by pent-up
demand on the first trading day of 2011.
Bullion's safe-haven demand was weakened after U.S. data
showed manufacturing grew for a 17th straight month in
December, extending a recent run of encouraging economic data
and suggesting U.S. growth could accelerate further in 2011.
[]
"The stock market is doing very well, and with the dollar
still relatively weak, investors tried to run the gold but they
just failed," said Bruce Dunn, vice president of trading at
bullion dealer Auramet.
U.S. stocks rose, lifting the Nasdaq 100 to a 10-year high,
as investors bet a 2010 rally would continue in the new year
and factory and housing data pointed to a strengthening
recovery. []
The dollar was also flat against a basket of currencies,
after it trimmed gains against the euro after the strong U.S.
data. []
Spot gold <XAU=> inched down less than 0.1 percent to
$1,419.90 an ounce at 12:14 p.m. EST (1714 GMT).
U.S. gold futures for February delivery <GCG1> fell $1.90
an ounce to $1,419.50. Volume was lower than usual with the
London market still on holiday.
As the new year gets underway, expectations for more bad
news on euro zone debt, concerns over potential inflation in
developing economies and an increased focus on the U.S. deficit
are set to maintain surging demand for gold, analysts said.
"Considering the overall expectations for the rally to
continue, I could see a new high soon, as momentum will try to
take it higher," said Ole Hansen, senior manager at Saxo Bank.
Earlier in the session, gold rose to a peak of $1,423.57 an
ounce, its highest since early December, less than $10 below a
record of $1,430.95 set on Dec. 7.
"The fundamentals are driving the price, and those
fundamentals remain fear-driven," said Pradeep Unni, a senior
analyst at Richcomm Global Services in Dubai.
"Gold (steps) into the New Year with all its current
fundamentals intact ... sovereign debt risk, macro uncertainty,
concerns over currency stability, medium-term inflation fears
as the U.S. Federal Reserve implements Quantitative Easing II,
geopolitical tensions and low interest rates."
EURO ZONE DEBT WORRIES
The euro was little changed against the dollar, erasing
earlier loSses on persistent concerns about euro zone debt.
These worries can work both ways for gold. A weaker euro,
and consequently stronger dollar, typically pressures gold
prices, but concerns over sovereign debt are set to support
demand for the metal as a haven from risk.
"(We look) for the gold market to start out 2011 on a
strong note," said MF Global in an end-of-year report. "Support
may come from a resumption of investment inflows and a renewed
focus on European sovereign debt issues."
"Background support will be offered by quantitative ease,
and improved (jewellery) demand," it added. "Negative factors
will linger in the background as well but should be shelved in
the midst of fresh investment this week."
The strong inverse relationship between gold and the dollar
weakened to such an extent last year that gold prices managed
to rise nearly 30 percent at the same time that the dollar rose
more than 6.5 percent against the euro.
Among other precious metals, silver <XAG=> hit its highest
since 1980 at $31.22 an ounce as investors continued to pick up
the metal as a cheaper proxy for gold. It rose 0.5 percent to
$31.02 an ounce.
Platinum <XPT=> gained 0.6 percent to $1,778.49 an ounce,
and palladium <XPD=> climbed 0.1 percent tot $800.60, having
earlier touched its highest since March 2001 at $805.50 an
ounce.
Palladium and silver were among the best-performing
precious metals last year, up 97 percent and 83 percent
respectively.
Autocatalyst metal palladium is seen as the better bet for
2011, however, on expectations its market balance will
tighten.
In the United States, December is expected to be the third
straight month of strong auto sales, capping a year of gradual
recovery for the sector. []
Prices at 12:26 p.m. EST (1726 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCG1> 1420.20 -1.20 -0.1% -0.1%
US silver <SIH1> 31.025 0.088 0.3% 0.3%
US platinum <PLJ1> 1786.60 8.40 0.5% 0.5%
US palladium <PAH1> 805.35 2.05 0.3% 0.3%
Gold <XAU=> 1419.75 0.30 0.0% 0.0%
Silver <XAG=> 30.98 0.12 0.4% 0.4%
Platinum <XPT=> 1777.99 10.49 0.6% 0.6%
Palladium <XPD=> 800.93 1.43 0.2% 0.2%
Gold Fix <XAUFIX=> 1410.25 4.75 0.3% 0.0%
Silver Fix <XAGFIX=> 30.63 -7.00 -0.2% 0.0%
Platinum Fix <XPTFIX=> 1731.00 24.00 1.4% 0.0%
Palladium Fix <XPDFIX=> 791.00 6.00 0.8% 0.0%
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
