* Gold rises for third day on jitters over eurozone crisis
* U.S. said not in discussion to back bigger EU fund
* Goldman: Gold prices to peak at $1,750/oz in 2012
* Coming up: U.S. November nonfarm payrolls on Friday
(Recasts, adds comments, updates prices to market close,
changes byline/dateline, previously LONDON)
By Frank Tang
NEW YORK, Dec 1 (Reuters) - Gold rose for a third straight
day Wednesday on lingering fears about a sprawling European
debt crisis and fund buying in commodities across the board.
The market is also evaluating what appears to be a mixed
outlook from Goldman Sachs, which now forecasts gold prices to
peak near $1,750 an ounce in 2012 on rising U.S. interest rates
amid better economic outlook, even as bullion's rally is
expected to continue in 2011 due to quantitative easing.
[]
The European Central Bank came under pressure on Wednesday
to take new steps to stabilize the euro zone in the face of a
crippling debt crisis that has stoked contagion fears in the
United States and Asia. []
"There is still an underlying concern about the development
in Europe going forward, which can be reflected in the increase
in the prices of credit default swaps in German government
debt. Perhaps some people think gold doesn't look like a bad
place for refuge," said Peter Buchanan, senior economist at
CIBC World Markets.
German's sale of over 4 billion euros in its five-year
government debt was met with the worst demand in six months.
[]
Analysts also cited fund buying in the commodities spectrum
on the first day of December, as the Reuters/Jefferies CRB
index <.CRB> rose 2.5 percent, led by crude oil's sharp rally.
[]
Spot gold <XAU=> rose 0.3 percent to $1,389.21 an ounce at
2:25 p.m. EST (1925 GMT). U.S. gold futures for February
delivery <GCG1> settled up $2.20 at $1,388.30.
Silver <XAG=> rose 1.1 percent to $28.37 an ounce.
On what looked set to be a quite day for precious metals,
gold turned higher in a knee-jerky rally after a Reuters story
said the United States would be ready to support an extension
of the European Financial Stability Facility through an extra
commitment of money from the International Monetary Fund.
However, a U.S. Treasury spokesman said the United States
is not discussing the matter. []
U.S. gold and silver volume was softer than usual for a
second consecutive day, as most investors have completed
rolling over their futures after December's first notice day on
Tuesday.
The precious metal gave up gains in euro and sterling
terms, after hitting record highs in both currencies.
Euro-priced gold <XAUEUR=R> retreated after earlier hitting
a peak of 1,070.11 euros an ounce, an all-time high, while gold
in sterling <XAUGBP=R> also pared gains after touching a record
895.49 pounds an ounce.
The euro rebounded on Wednesday, snapping a three-day
decline, on speculation the European Central Bank may take bold
steps to ease the region's debt crisis at a meeting on
Thursday. []
"Gold is like a see-saw on a hot air balloon," said
Mitsubishi Corp analyst Matthew Turner.
"Sometimes the euro end is rising relative to the dollar
end, at other times the dollar end is rising relative to the
euro end, but if you look around you realize that most of the
time both ends are rising in absolute terms."
Better-than-anticipated economic data in China, Europe and
the United States lifted world stocks, while bets the European
Central Bank could step up its bond buying program partially
offset fears about the euro-zone debt crisis.
Wall Street rose more than 2 percent after data showed
U.S. private sector payrolls rose by the biggest amount in
three years in November, lifting optimism about the job market
ahead of Friday's key employment report. []
GOLDMAN: GOLD PRICES TO PEAK IN 2012
Goldman Sachs painted a mixed picture on gold's outlook. In
a Wednesday note, the investment bank said it is prudent for
gold investors to begin to protect against downside risk as
bullion prices are expected to peak in 2012. []
"As we look toward 2012, we find it timely to reiterate our
view that at current price levels gold remains a compelling
trade, but not a long-term investment," Goldman said in a
note.
On the supply side of the market, the World Gold Council
reported that bullion sales under the third Central Bank Gold
Agreement have totalled only 20.4 tonnes in the second year of
the pact so far, with the bulk of sales made by the
International Monetary Fund. []
Among other precious metals, platinum <XPT=> rose 1.5
percent to $1,680.50 an ounce, while palladium <XPD=> was the
biggest gainer, up more than 5.4 percent to $733.47.
Prices at 2:49 p.m. EST (1949 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCG1> 1388.30 2.20 0.2% 26.6%
US silver <SIH1> 28.413 0.201 0.0% 68.7%
US platinum <PLF1> 1684.00 17.60 1.1% 14.5%
US palladium <PAH1> 732.30 29.30 4.2% 79.1%
Gold <XAU=> 1388.19 3.25 0.2% 26.6%
Silver <XAG=> 28.37 0.32 1.1% 68.5%
Platinum <XPT=> 1678.24 22.24 1.3% 14.5%
Palladium <XPD=> 733.22 37.22 5.3% 80.8%
Gold Fix <XAUFIX=> 1385.50 -6.00 -0.4% 25.5%
Silver Fix <XAGFIX=> 28.74 161.00 5.9% 69.2%
Platinum Fix <XPTFIX=> 1675.00 2.00 0.1% 14.3%
Palladium Fix <XPDFIX=> 716.00 9.00 1.3% 78.1%
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
