* China bank reserve move helps dollar but euro pares losses
* Analysts eye interest-rate outlook
* Launch of new U.S. ETFs fuels investment interest in PGMs
(Releads, updates prices)
By Jan Harvey
LONDON, Jan 12 (Reuters) - Gold and platinum prices steadied
in Europe on Tuesday as weakness in U.S. stock markets curbed
gains made by the dollar after China tightened monetary policy,
a move seen as a precursor to higher interest rates.
Spot gold <XAU=> recovered from a session low of $1,144.00
an ounce to $1,152.60 an ounce at 1546 GMT versus $1,151.10 late
in New York trade on Monday.
China's announcement that it was raising banks' reserve
requirements by 0.5 percentage points -- the clearest sign yet
it has begun to tighten monetary policy -- initially lifted the
dollar and cut the appeal of non-interest bearing precious
metals. []
The move, which analysts say is a response to concerns parts
of the economy may be overheating, suggests that policymakers
there are focusing on inflation.
A rise in interest rates, while seen by few as imminent, is
nonetheless "the next natural move", according to one analyst.
U.S. rates slumped to historic lows in the fallout of the global
economic slump triggered in 2007.
"Gold doesn't like real interest-rate environments which are
very high and positive because it is a non-interest bearing
asset," said Michael Lewis, head of commodities research at
Deutsche Bank.
"It has a much better chance for competing for investment
inflows in low or negative real interest-rate environments."
Gold often acts as a hedge against inflation for some
investors, but at the same time its lack of yield makes it
unattractive in an environment of rising interest rates.
The dollar pared gains against the euro after equity markets
opened lower on Wall Street. A stronger U.S. currency curbs
gold's appeal as an alternative asset and makes dollar-priced
commodities more expensive for other currency holders. []
PLATINUM, PALLADIUM SUPPORTED
Platinum <XPT=> was at $1,594.50 an ounce against $1,591.50,
off a low of $1,571 it hit after the China news. Earlier it
reached $1,624, its highest since August 2008, while palladium
hit an 18-month high of $439. It was later at $434 against $431.
Platinum and palladium prices jumped to their highest since
mid-2008 earlier on Tuesday as the launch of new investment
products in the United States and hopes for a recovery in
industrial demand fuelled buying.
"We have a new player on the market, and that is the new
palladium and platinum ETFs being traded in the United States,"
said Commerzbank analyst Eugen Weinberg. "We have seen strong
demand for them in the first two days of trading."
"Chinese car sales data (on Monday) also supported platinum
and palladium prices, because it was so strong," he added. "But
I think really demand at the moment is coming not so much from
industry but from the investment side." []
More than half of global platinum and palladium demand comes
from carmakers, which use the metals in autocatalysts. Car
demand figures are therefore closely watched by PGM traders.
For a graphic showing the relationship of platinum and
palladium prices to car sales, click on:
http://graphics.thomsonreuters.com/0110/CMD_PLDPLT0110.gif.
China's auto sales surged past those of the United States to
reach record levels last year on government incentives, and are
poised for solid but slower growth in 2010. []
Analysts say investment buying sparked by expectations for a
recovery in car demand in 2010 could lead platinum and palladium
to outperform other precious metals this year. []
Silver <XAG=> was at $18.56 an ounce against $18.55.
(Additional reporting by Humeyra Pamuk; Editing by Keiron
Henderson)
