* Gold investment set to stay strong in 2011
* Dollar firms 0.1 pct versus a currency basket
* Coming up: minutes of Fed Dec. 14 meeting, 1900 GMT
(Updates prices)
By Jan Harvey
LONDON, Jan 4 (Reuters) - Gold eased on Tuesday in the first
trading day of 2011 on the London financial markets, coming
under pressure from a firmer dollar, but investor concerns over
debt and inflation continued to support the metal.
Expectations that the euro zone debt crisis could worsen,
concerns over the potential for inflation in developing
economies and an increased focus on the U.S. deficit are set to
maintain investment demand for gold, analysts said.
Spot gold <XAU=> was bid at $1,407.50 an ounce at 1209 GMT,
against $1,414.00 late in New York on Monday. U.S. gold futures
for February delivery <GCG1> fell $15.00 an ounce to $1,407.90.
"The majority of factors for gold are very positive," said
Credit Suisse precious metals analyst Tom Kendall.
"If you were looking for negatives, you would have to say
the lack of any sizeable dehedging programme this year from the
miners would be one that you could pick up on, but from the
investment community, sentiment is still very much bullish
towards gold."
A firmer dollar prevented gains on Tuesday, however. This
usually weighs on gold, because it makes assets priced in the
U.S. unit more expensive for other currency holders and curbs
the metal's appeal as an alternative investment.
The dollar firmed after upbeat U.S. data suggested the
world's biggest economy will accelerate in 2011, while the euro
eased slightly, with some traders citing talk of euro selling by
investors related to euro zone bond redemptions. []
Currency traders are awaiting the release of minutes to the
Federal Open Market Committee's Dec. 14 meeting at 1900 GMT. The
statement following the meeting highlighted the difficulty in
bringing down unemployment.
Industrial commodities firmed, with oil ticking up towards
its highest in more than two years and copper kicking off the
year with a new record peak. European shares also rose. []
[] []
"Pressure (on gold) is expected to return over the next week
or two based on our expectation for a reversal in oil prices,
gains in the stock market and general stability in the dollar,"
said MF Global in a note.
INDIAN DEMAND SOFTENS
Gold demand in the world's biggest bullion consumer, India,
was weak on Tuesday as the country's wedding season neared its
end. "There is less demand as prices are really volatile," said
one dealer. "Some stagnation is coming." []
Among other precious metals, spot silver <XAG=> was flat at
$30.66 an ounce, retreating a touch from the previous session's
peak of $31.22, its highest since 1980.
Platinum <XPT=> was at $1,765.50 an ounce against $1,766,
while palladium <XPD=> was at $788.47 against $789.97.
Both platinum group metals, which are primarily used in auto
catalysts, are expected to build on last year's gains in 2011 as
demand for cars continues to rise, particularly in the key
Chinese market.
General Motors <GM.N> said on Tuesday it sold 2.35 million
vehicles in China in 2010, up 28.8 percent from a year earlier.
[]
But Beijing's decision to limit new car registrations in the
capital, announced in late December, is expected to cool the
country's fast-expanding auto sector. []
"The Beijing restrictions follow the expiration of vehicle
tax incentives for smaller cars across China at year-end," said
UBS in a note. "We expected Chinese subsidies to cease
altogether in 2011, and this is reflected in our forecasts for
China's auto sales."
"The price implication of these events is greater for
palladium than for platinum, given that the Chinese auto market
is predominantly gasoline-based and based on commentary out of
China on initial 2011 sales so far, it's quite likely that
January auto sales will softer than recent months."
(Reporting by Jan Harvey; Editing by Anthony Barker)
