* Gold rises, euro debt crisis, physicals help
* Gold to retrace to $1,372/oz -technicals []
* Coming Up: U.S. Federal budget, Dec; 1900 GMT
(Updates prices, premiums in Tokyo)
By Lewa Pardomuan
SINGAPORE, Jan 12 (Reuters) - Bullion edged up in thin
trade on Wednesday, with sentiment supported by high oil
prices, lingering worries about the severity of the European
debt crisis and a shortage of gold bars in Asia.
European finance ministers will discuss increasing the
effective lending capacity of their financial rescue fund next
week, EU sources said on Tuesday, as Portugal defied pressure
to seek a bailout. []
Spot gold rose $3.60 an ounce to $1,384.05 an ounce
by 0449 GMT. Despite safe haven buying related to the crisis
in the euro zone, bullion was well below a historical high of
around $1,430 struck in December.
But physical dealers said gold could rise further as
demand from jewellers and investors picked up in India and
China, leading to tighter stocks for gold bars in Singapore
and Hong Kong. Premiums for gold bars are at two-year highs.
"It's more on the upside. I think physical buying actually
provides good support," said Beh Hsia Wah, a dealer at United
Overseas Bank in Singapore. "I would say the physical support
is there and some buying is there."
Worries about inflation in China, the world's
second-largest gold consumer after India, drove investors to
bullion, while purchases from jewellers also increased before
the Lunar New Year in February.
In India, jewellers stocked up ahead of the harvest season
in the middle of January. Gold imports in India are likely to
jump 64 percent to 500-550 tonnes in 2011, driven by
investment purchases that are likely to affect world prices.
[]
Silver rose to a one-week high on firm gold prices
and purchases from investors and the industrial sector in
China.
"We have seen some strong demand of silver for industry
from China. It might silver pre-ordered before the Chinese new
year," said a dealer in Tokyo.
"Premiums for gold bars are flat in Tokyo. I don't think we
have available stocks for exports to Hong Kong because we
don't see much sell back from the general public here."
U.S. gold futures for February were steady at
$1,385 an ounce, having settled $10.2 higher on Tuesday.
"Buying from China and India put a floor on gold prices
but a strong dollar is likely to cap gold's gains for the time
being," said a dealer in Hong Kong.
"I think it's a matter of time before the problems in
Europe are solved. China and Japan may buy the bonds. Nobody
wants the problems in Europe to deteriorate further."
Gold may retrace slightly to $1,372 per ounce before
rebounding further to $1,392, based on its wave pattern and an
inverted head-and-shoulders pattern, according to Wang Tao, a
Reuters market analyst for commodities and energy technicals.
For a 24-hour gold technical outlook:
http://graphics.thomsonreuters.com/WT/20111201090530.jpg
The euro made thin gains on Wednesday, extending this
week's rebound but with limited ability to rise as caution
gripped the market ahead of debt sales by highly indebted euro
zone countries.
Japan, following in the footsteps of China, promised to
buy euro zone bonds this month in a show of support for the
single currency area's struggle to overcome a seething debt
crisis that helped steady the euro .
But a respected former European Central Bank official,
Otmar Issing of Germany, warned that failure to use the crisis
to enforce Europe's budget rules more strictly could lead to
the eventual breakup of economic and monetary union.
In the energy market, Brent crude prices stayed near $98
on Tuesday, the highest level since October 2008, as
production shutdowns in Norway and Alaska raised expectations
of an accelerated tightening of supplies in Atlantic basin,
Middle East and Asia-Pacific oil markets.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust , said its holdings slipped to 1,271.467
tonnes by Jan 11 from 1,272.682 tonnes on Jan 10.
Precious metals prices at 0449 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1384.05 3.60 +0.26 26.32
Spot Silver 29.63 0.13 +0.44 76.05
Spot Platinum 1769.99 4.00 +0.23 20.65
Spot Palladium 790.75 8.75 +1.12 95.01
TOCOM Gold 3712.00 25.00 +0.68 13.90 47807
TOCOM Platinum 4793.00 85.00 +1.81 9.40 25198
TOCOM Silver 79.60 1.60 +2.05 53.97 1663
TOCOM Palladium 2130.00 84.00 +4.11 82.83 1303
Euro/Dollar 1.2983
Dollar/Yen 83.12
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Ed Lane)
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