* Fund buying pushes gold above $1,200/oz
* China gold market liberalisation seen as supportive
* Technical analysts turn cautiously optimistic
(Updates prices)
By Jan Harvey and Amanda Cooper
LONDON, Aug 4 (Reuters) - Gold rose above $1,200 an ounce in
Europe on Wednesday as a swell of fund buying put the price on
track for its sixth successive daily gain.
A soft performance on the global equity market and
expectations for a rise in Chinese demand were early drivers to
the day's rally, although U.S. private sector jobs data pushed
up the dollar and diffused some of gold's safe-haven appeal.
Spot gold <XAU=> rose to a high of $1,202.85 an ounce, its
strongest since July 23, and was bid at $1,201.15 an ounce at
1523 GMT versus $1,185.35 late in New York on Tuesday. U.S. gold
futures for December delivery <GCZ0> rose $16.30 to $1,203.80.
Much of the concern over the euro zone debt burden and the
outlook for the global economy has been allayed by an upbeat
earnings season and the financial safeguards put in place to
protect the banking sector, thereby removing vital catalysts
that propelled gold to all-time highs in late June.
But with consumer demand now flourishing in several key
regions such as India and China, analysts expect gold to remain
firm this year.
"This is not suddenly the spring board to $1,300 an ounce.
This market is going to pull back and then rally," said Peter
Hillyard, head of metal sales at ANZ Bank.
"I'm one of those that believes that by year-end we will see
gold with a $1,300-handle ... that doesn't mean that it can't go
back to $1,190 or $1,185 on its way there," he said.
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.
Concerns over the pace of the U.S. recovery pushed the dollar
towards 15-year lows against the Japanese yen <JPY=>. []
U.S. stocks meanwhile failed to hold gains made after the
payrolls processor ADP Employer Services said private employers
added 42,000 jobs in July, compared with a revised gain of
19,000 in June. [] []
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."
Platinum <XPT=> was at $1,583.15 an ounce versus $1,576.50
and palladium <XPD=> at $498.98 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 $18.58 an ounce against $18.42.
(Editing by Sue Thomas)
