* Gold holds, consumer demand offsets rise in risk appetite
* Coming up: U.S. federal budget for August; 1800 GMT
(Updates throughout with comment, prices; changes byline and
dateline, prvs SINGAPORE)
By Amanda Cooper
LONDON, Sept 13 (Reuters) - Gold held largely steady on
Monday, within about 1.3 percent of record highs, as improving
consumer demand helped cushion the impact of upbeat Chinese
economic data on investor desire for safe-haven assets.
Adding to confidence in the investment community was a deal
at the weekend on global bank rules that gave lenders more time
than analysts had originally expected to increase their capital
to protect against any future potential credit crunches.
Spot gold prices <XAU=> were last at $1,242.45 an ounce by
0915 GMT, against $1,245 in New York on Friday. Renewed investor
caution last week sent gold to within a few dollars of its
all-time high set in late June at $1,264.90.
U.S. December gold futures <GCZ0> were down $2.0 an ounce at
$1,244.40.
"It seems risk is a bit back on the table, with China
looking okay and Basel swinging the whip, but so far ahead that
it's going to take quite a few years for the banks to implement
(the rules)," said Ole Hansen, senior manager at Saxo Bank.
The new banking requirements, known as Basel III, will
require banks to hold top-quality capital totalling 7 percent of
their risk-bearing assets, but a long lead-in time eased fears
that lenders will have to rush to raise capital. []
With equities up, government bond prices down and the dollar
down against a basket of currencies, gold struggled to make much
headway on the upside.
"We obviously are at a bit of a crucial point here, when we
have these big moves and we get the rejection (of the high), we
do need to look for support to return fairly quickly in order
not to see that correction become any deeper," Hansen said.
He added gold is facing fairly stiff resistance around
$1,260 and support is evident at $1,240, then around $1,222.
UPBEAT DEMAND OUTLOOK
Although consumer demand in Asia was muted on Monday, the
outlook for demand in Europe this year looks fairly bright.
Jewellery sales in Italy - Europe's largest jewellery market
- are likely to rise by 10-12 percent this year, and grow again
next year as consumer demand slowly improves after the economic
crisis, according to a senior industry official. []
Holdings in the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust <GLD.P> were unchanged at 1,293.531
tonnes. []
Helping improve risk appetite was a pickup in Chinese
industrial production and money growth in August that reflected
buoyant economic growth despite government efforts to clamp down
on bank lending and property speculation. []
Inflation, though at a 22-month peak, is unlikely to trigger
an immediate interest rate hike, analysts said, as higher food
costs were expected to be transitory after a spell of bad
weather hit the country in the summer.
"After some positive data from China, the economic prospect
brightens and fear of a double-dip fades, we may see gold
retreat a bit today due to profit-taking and easing of
safety-haven need," said Ong Yi Ling, an analyst at Philip
Futures.
Silver and the platinum group metals rose along with other
industrial commodities such as crude oil <CLc1> and base metals
like copper <CMCU3> on the back of rising expectations for
demand from China, a major consumer of raw materials.
Spot silver <XAG=> was last at $19.89 an ounce, against
$19.84 on Friday, while platinum <XPT=> was at $1,548 an ounce,
against $1,536.98 and palladium <XPD=> was at $521.50, from
$514.63.
Improving investor confidence can often result in a
reduction in demand for gold, although Michael Blumenroth, an
analyst with Deutsche Bank, said if an improving economic
backdrop added to price pressures, this would maintain gold's
allure as a hedge against inflation.
"If risk appetite does come back and bonds go down and
stocks up, then people will get the inflation theme on the table
soon, then gold will be bought because of that," he said.
The euro surged on Monday as positive market sentiment
following the Chinese data and a lack of surprises from the
Basel III rules sent it up nearly 1 percent on the dollar.
[]
(Additional reporting by Maytaal Angel)
(Editing by Keiron Henderson)
