* Gold above $1,200 for first time in almost 3 weeks
* Market took heart from China gold market liberalization
* Coming up: U.S. July nonfarm payrolls on Friday
(Recasts, updates prices to market close, adds comments,
changes byline, dateline, previous LONDON)
By Frank Tang
NEW YORK, Aug 4 (Reuters) - Gold rose above $1,200 an ounce
on Wednesday for the first time in nearly two weeks, as strong
physical demand lifted the metal higher for its sixth straight
daily gain.
Better-than-expected U.S. jobs and services data and
expectations for stronger Chinese bullion demand increased
bullion's inflation-hedge appeal, sparking bullion's rally.
Spot gold <XAU=> rose to a high of $1,202.85 an ounce, its
strongest since July 23, and was at $1,194.95 an ounce at 1:56
p.m. EDT (1756 GMT) versus $1,185.35 late in New York on
Tuesday. U.S. gold futures for December delivery <GCZ0> settled
up $8.40 at $1,195.90.
With physical demand now flourishing in India and China,
the world's top two gold consumers, analysts expect gold to
remain firm this year.
Gold continued to rise in the face of a stronger dollar,
reversing a trend earlier this year when the metal moved in
tandem with the U.S. currency driven by safe-haven demand.
[]
The metal lost 5 percent in July and was sharply below an
all-time high at $1,264.90 an ounce set June 21, due to fading
safe-haven demand as much of the concern over the euro zone
debt burden and recession worries have been allayed by upbeat
corporate earnings and better economic data.
The technical picture also improved. Investors are
regaining confidence in the yellow metal after prices bounced
from a key long-term support area last week.
Tow Pawlicki, MF Global's precious metals and energy
analyst, said that the December contract's Wednesday rally
lifted prices above a downward channel formed back in late
June.
He pegged December's resistance at its 50-day moving
average at $1,216, which was near its mid-July highs.
(Graphic: http://link.reuters.com/nab43n)
"Technically, there are still worries because of the lack
of confirmation by higher level of open interest, which has
fallen during the last couple of days while the market has
rallied -- usually a negative sign," Pawlicki said.
(Graphic: http://link.reuters.com/vab43n)
Weak U.S. consumer spending and housing data in recent days
have fueled speculation the U.S. Federal Reserve may further
loosen monetary policy at its Aug. 10 meeting. This may favor
gold, which tends to benefit from a looser economic policy.
Analysts said that quantitative easing by the Fed could
increase uncertainty that the economy might not have recovered
as quickly as people had expected.
CHINA GOLD TRADE
The gold market also continued to take support from news
that China vowed to develop its market to make gold trading
easier. [].
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,
liberalize, and expand this market should, in time, foster a
rising appetite for gold."
Platinum <XPT=> was at $1,576 an ounce versus $1,576.50
late Tuesday and palladium <XPD=> at $494 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 $18.25 an ounce against $18.42 in the
previous session, as the market took a breather after recent
sharp gains.
Prices at 2:37 p.m. EDT (1837 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1195.90 8.40 0.7% 9.1%
US silver <SIU0> 18.278 -0.144 0.0% 8.5%
US platinum <PLV0> 1586.20 -0.90 -0.1% 7.8%
US palladium <PAU0> 500.15 -6.30 -1.2% 22.3%
Gold <XAU=> 1195.25 9.90 0.8% 9.0%
Silver <XAG=> 18.24 -0.18 -1.0% 8.3%
Platinum <XPT=> 1576.00 -0.50 0.0% 7.5%
Palladium <XPD=> 494.00 -4.35 -0.9% 21.8%
Gold Fix <XAUFIX=> 1199.50 5.00 0.4% 8.7%
Silver Fix <XAGFIX=> 18.50 8.00 0.4% 8.9%
Platinum Fix <XPTFIX=> 1590.00 3.00 0.2% 8.5%
Palladium Fix <XPDFIX=> 504.00 4.00 0.8% 25.4%
(Additional reporting by Jan Harvey and Amanda Cooper in
London; Editing by Marguerita Choy)
