* Support stems from ongoing worry over Europe debt
* Chart support established just below $1,200/oz-analysts
(Updates throughout with comment, refreshes prices)
By Amanda Cooper
LONDON, July 14 (Reuters) - Gold pared earlier losses to
rise for a second day on Wednesday, building on Tuesday's gains,
as investor concern over the U.S. economic outlook prompted a
late jump in the euro that lifted the precious complex.
Spot gold <XAU=> was bid at $1,209.10 an ounce at 1455 GMT,
against $1,210.65 late in New York on Tuesday, having earlier
fallen to a session low of $1,205.75. U.S. gold futures for
August delivery <GCQ0> rose $3.00 to $1,216.50.
A downgrade of Portugese debt by Moody's helped drive the
gold price up by over 1 percent on Tuesday as it brought the
concern over the euro zone debt crisis back into sharp focus and
a weak reading of U.S. retail sales hit investor confidence
afresh in Wednesday's session.
"It is the quiet heartbeat of a market that is alive, but
not exactly jumping about," said ANZ strategist Peter Hillyard.
"At the moment, people believe it still has some oomph in it
and the capacity to go higher and I believe that ... the
market's focus will (again) become the fears about currencies,
the weakness in currencies and what on earth do you put your
money in," he said, adding that this ongoing worry about the
broader financial markets would keep gold supported.
The euro hit its highest in two months against the U.S.
dollar, reversing earlier losses. Analysts said the second
monthly drop in retail sales and the international trade data
this week had prompted some economists to scale back their U.S.
growth forecasts. []
"You have got to be frightened to want to be long of gold,
and we don't have that factor," said Credit Agricole analyst
Robin Bhar.
"But we still have uncertainties. There are still worries
about debt, about currency devaluation, about inflation becoming
higher. That is all supportive of this notion of there being a
fairly solid floor for gold."
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http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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ESTABLISHES SUPPORT
From a technical perspective, gold has established support
just below $1,200 an ounce. Analysts who study charts of past
price moves to determine the future direction of trade are
cautiously optimistic its correction may be over.
"Intraday charts appear to be forming a small basing pattern,
and the recovery through the $1,215/18 area suggests that the
downtrend from the June peak has stabilised," said Barclays
Capital in a note.
"The risk is now for a choppy move higher towards $1,225/27.
However, in the least, a recovery above $1,235 is needed to
suggest that gold is primed to post new 2010 highs."
Investor Marc Faber told Swiss business daily Handelszeitung
gold offered an ideal way to preserve purchasing power at a time
of heightened risk aversion.
"Perhaps the (gold) price will decline, but when other asset
classes witness a steeper fall, then you are relatively well
positioned. Therefore, gold should not be viewed as a commodity,
but rather as a currency," the paper quoted Faber as saying.
Among other precious metals, silver <XAG=> rose by over 1
percent to $18.42 an ounce, compared with $18.20.
The gold-silver ratio -- how many ounces of silver are
needed to buy an ounce of gold -- hit a two-week low of 66.5 on
Tuesday as silver outperformed gold in a rising market.
"We require a close below 65.55 to bring in fresh selling of
the ratio," said ScotiaMocatta in a note.
Elsewhere platinum <XPT=> was at $1,528.50 an ounce against
$1,524.50, while palladium <XPD=> was at $465.50 against $463.
(Additional reporting by Jan Harvey in London; editing by
Keiron Henderson)
