* Precious metals recover from sharp pullback
* World Bank's Zoellick says not advocating gold standard
* Coming up: U.S. initial jobless claims; 1330 GMT
(Updates prices)
By Amanda Cooper
LONDON, Nov 10 (Reuters) - Gold rose to hold around $1,400
an ounce on Wednesday, recovering from its choppiest trading
session in six months the day before, as concerns about euro
zone debt reignited safe-haven buying.
Silver pared Tuesday's 3 percent drop.
Spot gold rose 0.5 percent to $1,398.45 an ounce by 1233
GMT, off Tuesday's all-time peak of $1,424.10.
In its most volatile day of trade since May, gold dropped
more than $30 from this peak in the previous session, triggered
by a sharp sell-off in U.S. silver futures caused by a 30
percent hike in margins as well as a stronger dollar.
[]
Supporting gold further was investor discomfort over debt
burdens in the euro zone and the risk of funding problems or
even potential default in some peripheral countries of the
single currency block.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Silver exchange-traded fund trading volumes reached 10 times
the average, graphic:
http://link.reuters.com/fef64q
Gold price performance: http://link.reuters.com/juz44q
Greek, Irish bond yield spread: http://r.reuters.com/tuk54q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The premium investors demand to hold Irish government debt
hit a new euro lifetime high after clearer LCH.Clearnet
increased margin requirements for Irish bonds, although Middle
East buying protected the euro from a more aggressive sell-off.
"With the dollar (volatile) at the moment, gold is prone to
those choppy moves," said VTB Capital analyst Andrey
Kryuchenkov.
"The inverse correlation (to the dollar) is starting to
weaken, which shows there is concern creeping in about the euro
zone, and that should limit the downside in gold," he said,
adding: "There are some willing buyers."
BACK TO GOLD
Investors have been delving into gold once more as evidenced
by holdings of bullion in the world's largest gold-backed
exchange-traded fund, SPDR Gold Trust, holding steady over the
past couple of weeks, just above 1,290 tonnes. []
"Gold tends to be pretty resilient and finds a reason to
bounce back," said Darren Heathcote, head of trading at Investec
Australia.
Gold priced in euros <XAUEUR=R> was last up 0.7 percent at
1,015.95 euros, while Swiss franc-priced bullion <XAUCHF=R> was
up 1.2 percent at 1,358.07 francs and sterling-priced gold
<XAUGBP=R> was flat on the day at 869.45 pounds an ounce. It was
under some pressure from the rise in sterling after the Bank of
England's inflation report. []
Currency tensions are high on the agenda at this week's G20
summit of advanced and developing nations in Seoul, where
negotiators sought on Wednesday to gloss over divisions on
global economic policies after a day of heated arguments.
[]
World Bank President Robert Zoellick said on Wednesday he
was not advocating a return to a gold standard, days after he
suggested the world's largest nations consider gold as an
indicator to help set foreign exchange rates. []
The dollar rose broadly, hitting its highest against the yen
in one month, while the euro came under pressure, chiefly from
sterling after a hawkish BoE inflation report.
Usually a stronger dollar suppresses gold prices, but this
traditional inverse relation reached its weakest in almost two
months on Wednesday.
In top world gold producer China, plans to deregulate the
gold market are likely to boost imports of the precious metal to
satisfy investor demand, putting the country on course to
overtake India as the biggest global consumer in a few years.
[]
Meanwhile, silver was the top performer of the precious
metals complex with a 3 percent rise, following its most
volatile trading session since early 2009 the day before.
The CME Group, which owns the COMEX exchange, said it would
raise the margin requirement for silver futures to $6,500 a
contract from $5,000 previously, implying a leverage ratio of
21.5, to curb some of the volatility that has developed.
"It is important to put yesterday's price action into
context: despite its violence, Tuesday's pullback only brought
precious metals prices back to Monday's levels and should
therefore be seen as a clearing-out of intraday froth," said UBS
precious metals strategist Edel Tully, in a note.
"Pullbacks aren't a bad thing - they test the conviction of
existing longs and the eagerness of those waiting on the
sidelines."
Silver was at $27.65 an ounce, up by 3 percent on the day,
while holdings of metal in the iShares Silver Trust <SLV>, the
world's largest silver ETF, hit a new record high, indicating
strong investor demand. []
In the platinum group metals, palladium <XPD=> rose by 1.3
percent to $698.97, easing back from nine-year highs of $740.72
in the previous session.
Platinum <XPT=> was trading flat at $1,758.74 an ounce, off
Tuesday's two-year high of $1,806.5.
(Additional reporting by Rujun Shen in Singapore; Editing by
Anthony Barker)
