* Equities falter, dollar firms versus currency basket
* China gold market liberalisation seen supportive
* Technical analysts turn cautiously optimistic
(Updates prices)
By Jan Harvey
LONDON, Aug 4 (Reuters) - Gold rose above $1,190 an ounce in
Europe on Wednesday, benefiting from softer appetite for assets
such as stocks and expectations of a rise in Chinese demand,
though an ongoing dearth of safe-haven demand capped gains.
Spot gold <XAU=> rose to a high of $1,197.05 an ounce, its
strongest since July 23, and was bid at $1,196.15 an ounce at
1141 GMT versus $1,185.35 late in New York on Tuesday. U.S. gold
futures for December delivery <GCZ0> rose $10.90 to $1,198.40.
The precious metal has lost much of the support that drove
it to record highs earlier this year, based on concerns over
economic growth and fiscal stability. Other factors are,
however, now emerging to support gold after its dip.
"The initial impetus of safe-haven buying of gold has faded
away," said Standard Chartered analyst Daniel Smith. "We are
slowly moving to other drivers."
"Ultimately we are going to see more portfolio money coming
into gold," he added. "We could see consolidation in the short
term, but ultimately on a one to three month view we are going
higher."
Concerns over the pace of the recovery in the United States
knocked equities on Wednesday, with European shares falling more
than 1 percent to session lows. U.S. stock index futures also
fell, pointing to a lower opening on Wall Street. [] []
Weak U.S. consumer spending and housing data in recent days
have fuelled speculation the U.S. Federal Reserve may further
loosen monetary policy at its Aug. 10 meeting. This may favour
gold, which tends to benefit from a looser economic policy.
On the currency markets, the dollar fell towards a 15-year
low against the yen, but was broadly flat against the euro and
versus a basket of currencies. []
Among other commodities, oil prices slipped as a rally that
lifted prices to three-month highs near $83 a day earlier lost
steam, while industry data showed U.S. gasoline stockpiles rose
unexpectedly last week. []
CHINA GOLD TRADE
The gold market also continued to take support from news
that China had taken steps to liberalise its gold trade.
China said on Tuesday it will allow more domestic banks to
export and import gold as part of steps to encourage more liquid
trade, which could underpin the country's growing private demand
for the metal. []
"The international gold market is now paying a lot more
attention to China's gold demand, not just from an official
reserve asset perspective, but also private demand," UBS analyst
Edel Tully wrote in a note.
"Behind India, China is the second-largest physical
consumer," she added. "Therefore any step to integrate,
liberalise, and expand this market should, in time, foster a
rising appetite for gold."
Gold's rise this week has made technical analysts slightly
more positive towards the metal, although they remain cautious
until a clearer trend emerges.
"Daily momentum oscillators are turning bullish, but given
the significant decline in the dollar, recent price gains have
been lacklustre," said Barclays Capital in a note.
"As such, for the time being we are maintaining our bearish
bias, but the confidence in this view is falling sharply. Indeed
a closing break of the 21-day (now $1,190) would move us to a
neutral bias as a choppy range unfolds."
Elsewhere platinum <XPT=> was at $1,582.75 an ounce versus
$1,576.50 and palladium <XPD=> at $496 against $498.35.
The metals are chiefly consumed by the car industry for use
in autocatalysts. Data released on Tuesday showed U.S. auto
sales rose 5 percent in July in an uneven recovery. The rise was
the smallest in percentage terms since November. []
Silver <XAG=> was at $18.51 an ounce against $18.42.
(Editing by James Jukwey)
