* Gold regains strength, bargain hunters resurface
* Euro steadies, investors watch tension in Korea
(Updates prices, add quotes)
By Lewa Pardomuan
SINGAPORE, Dec 24 (Reuters) - Gold bounced on Friday after
a drop to a 1-week low the previous day attracted bargain
hunters, although thin trade ahead of the Christmas break and
a volatile euro could push prices in either direction.
Tensions in the Korean peninsula could underpin sentiment
after North Korea threatened a nuclear "sacred war" and South
Korea vowed a "merciless counterattack" if it was attacked
again.
Spot gold rose $1.61 an ounce to $1,381.50 an ounce
by 0237 GMT, having dropped to as low as $1,372.05 an ounce on
Thursday as the euro rebounded. Gold was well below a
historical high of around $1,430 hit earlier this month.
"We've seen more talk of potential conflict in Korea ...
we'd expect it will underpin gold for the moment," said Darren
Heathcote, head of trading at Investec Australia in Sydney.
"It's certainly looking a little bit stronger from where
it was earlier. But the market is extremely thin."
South Korea's land and sea exercises have prompted North
Korea, which has threatened to reduce the South to ashes on
many occasions, to denounce its richer neighbor as a
warmonger. []
North Korea has wielded its nuclear capability threat
before but analysts say it has no way to launch a nuclear
device. For scenarios, click []
U.S. gold futures for February ended $6.9 an ounce
at$1,380.5 an ounce on Thursday ahead of the long Christmas
weekend in the United States.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust , said its holdings slipped 1,284.973 tonnes
by Dec. 23 from 1,288.616 tonnes on Dec. 22.
The euro held its ground against the Swiss franc on Friday
after having staged a rebound overnight in what traders said
was a correction following a series of record lows this week.
But worries about a deepening debt crisis in Europe, which
helped send bullion to record highs, failed to subside.
More ratings downgrades for European countries, including
euro zone member Portugal, stoked fears that a debt crisis
that has already engulfed Ireland and Greece may spread
further.
[]
China's Commerce Minister Chen Deming was quoted as saying
on Friday that there are no quick fixes for Europe's debt
crisis and China must be on the alert for any escalation of
the problem, especially in January and February. []
There was hardly any trade in the physical market, with
jewellers in Singapore, Hong Kong and Indonesia already shut
for the Christmas break.
"Basically, there's no physical trading, but people will
still be cautious over tensions in Korea," said a dealer in
Singapore.
"I guess most people won't turn short over the long
weekend," said the dealer, adding safe-haven buying related to
the tensions in the peninsula could still stir up trade.
In top consumer India, buyers waited for a price
correction as the year wound down.
India's religious festivals, which boosted demand for gold,
ended last month and the wedding season ended this month. But
dealers have to buy to prepare for the next buying rush that
starts after the harvest festival mid-January, following which
weddings also take place.
Hong Kong jeweller Luk Fook Holdings (International) Ltd
is speeding up its expansion in China's cities as increasingly
rich Chinese snap up diamond rings, gold necklaces and
ornaments. []
Precious metals prices at 0237 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1381.50 1.61 +0.12 26.08
Spot Silver 29.29 -0.02 -0.07 74.03
Spot Platinum 1728.00 11.50 +0.67 17.79
Spot Palladium 755.00 4.51 +0.60 86.19
Euro/Dollar 1.3125
Dollar/Yen 83.03
(Editing by Himani Sarkar)
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