* Short-covering, currency volatilities boost gold
* Euro drops as Greece deal lacks details
* South Africa December gold output fell
(Recasts, updates comments, closing prices, market
activity, adds second byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Feb 11 (Reuters) - Gold rose above $1,090
an ounce on Thursday as investors turned to the metal as a
hedge against currency volatilities after news that European
governments agreed in principle to support heavily indebted
Greece.
Bullion was boosted by choppy currency trade as the euro
traded in a wide range from $1.38 to $1.35 due to investor
disappointment with the lack of details regarding the EU deal
to resolve fiscal problems in Greece. []
Bruce Dunn, vice president of trading at New Jersey-based
Auramet, said that gold was underpinned by the Greece bailout
news and position-squaring ahead of a U.S. three-day weekend.
"There was a fair amount of short-covering. The moves have
been so volatile lately that you just don't know what is going
to happen from one day to the next," Dunn said.
U.S. market will be shut on Monday for the Presidents'
Day.
Gold had dropped $60 in a two-day sell-off late last week
as heightened fiscal worries in Europe prompted risk aversion
and technical weakness in the metal.
Spot gold <XAU=> was at $1,095.75 an ounce at 2:40 p.m. EST
(1940 GMT), against $1,071.55 late in New York on Wednesday.
Bullion hit a session high $1,097.75, the highest since Feb.
4.
U.S. gold futures for April delivery <GCJ0> on the COMEX
division of the NYMEX settled up $18.40, or 1.7 percent, at
$1,094.70.
Gold benefited from fears over the outlook for paper
currencies in general, said Simon Weeks, head of precious
metals at the Bank of Nova Scotia.
"People don't really want to be overexposed to dollars.
They certainly don't want to be overexposed to euros and so on,
and to that extent gold is acting as a currency in its own
right," he said.
"So what you will find is even if the dollar strengthens,
gold can strengthen as well. In non-U.S. dollar currencies, it
is actually performing really well."
Gold prices jumped about 2 percent in euro terms <XAUEUR=R>
to a one-week high of 802.73 euros.
European leaders struck a deal to provide financial aid to
Greece earlier on Thursday, though details of the package were
not expected to be finalized until EU finance ministers meet
early next week. []
INVESTMENT DEMAND IN FOCUS
With jewelry demand still relatively soft, the market is
heavily dependent on investment demand, which is chiefly
subject to 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.
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. []
Silver <XAG=> was at $15.69 an ounce against $15.18.
Platinum <XPT=> was at $1,523.50 an ounce against $1,507, and
palladium <XPD=> was at $419 against $411.50.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1094.70 18.4 1.7 1096.20 -0.1
US silver <SIH0> 15.590 0.290 1.9 16.845 -7.5
US platinum <PLJ0> 1519.30 6.40 0.4 1471.00 3.3
US palladium <PAH0> 418.95 5.60 1.4 408.85 2.5
Prices at 2:26 p.m. EST (1926 GMT)
Gold <XAU=> 1094.30 22.75 2.1 1096.35 -0.2
Silver <XAG=> 15.62 0.44 2.9 16.84 -7.2
Platinum <XPT=> 1522.00 15.00 1.0 1465.50 3.9
Palladium <XPD=> 417.50 6.000 1.5 405.50 3.0
Gold Fix <XAUFIX=> 1076.25 -3.25 -0.3 1104 -2.5
Silver Fix <XAGFIX=> 15.37 -23.00 -1.5 16.99 -9.5
Platinum Fix <XPTFIX=> 1511.00 5.00 0.3 1466 3.1
Palladium Fix<XPDFIX=> 418.00 2.00 0.5 402 4.0
(Reporting by Frank Tang and Jan Harvey; Editing by Lisa
Shumaker)
