Gold rose in Europe on Tuesday as concerns over the euro zone's fiscal health returned, especially over Greece's ability to reduce its large budget deficit. The metal hit five-month highs last week as the prospect of Greece's debt problems spreading to other euro zone economies prompted buying of gold as a haven, but fell on Monday on news of the euro zone's $1 trillion (R7.53 billion) package package. The package sparked a relief rally in financial markets on Monday, with stock markets, the euro and industrial commodities rising sharply. The run higher has now run out of steam. "Peripheral European Union economies still face enormous fiscal and competitiveness challenges," HSBC said in a note. "We believe that these challenges will keep a bid in gold and may boost bullion prices if equity and other paper markets cool." PRICES * Spot gold was at $1 205.50 an ounce at 08:35 SA time compared with $1 201.90 late in New York on Monday. * Silver was at $18.42 from $18.44. * Platinum at $1 671 from $1 693. * Palladium at $515 from $529. DATA/EVENTS * US ICSC/Goldman Sachs release chain store sales for the week ended May 8, 13:45 SA time. * US Redbook weekly retail sales, 14:55 SA time. * US IBD/TIPP May consumer confidence index, 16:00 SA time. * US March wholesale inventories, 16:00 SA time. * US ABC weekly consumer comfort index, 23:00 SA time. MARKET NEWS * The dollar rose against the euro on Tuesday, with the single currency giving up some gains made the previous day due to the rescue package. * Oil fell towards $76 as a stronger dollar signalled lingering doubts about a resolution to Europe's debt crisis, and Chinese inflation data raised concern about potential monetary tightening measures. * Asian shares fell as the relief rally in financial markets fizzled. * European equities were expected to open lower on Tuesday after their biggest daily rise in more than 17 months the previous day, with weaker commodity prices seen hitting energy and mining shares. FUNDAMENTALS * The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings rose to a record high of 1 192.150 tonnes as of May 10, from 1 188.498 tonnes in the previous business day. * US gold coin sales surged this week as the anxiety over the euro-zone debt crisis spilled over into the United States and as Thursday's sudden Wall Street collapse shook investors. * The world's largest silver-backed exchange-traded fund, the iShares Silver Trust, said its holdings rose to 9 087.72 tonnes by May 10, up from 9 011.50 tonnes in the previous business day. TECHNICALS * Gold support at $1 184, resistance at $1 206, 14-day RSI at 27.6. * Silver support at $18.20, resistance at $18.67, 14-day RSI at 57.4. * Platinum support at $1 661, resistance at $1 701, 14-day RSI at 44.9. * Spot gold prices are expected to retrace a second time to $1 178.65 per ounce or lower to $1 170.45 after touching a low at $1 183.85 during the previous trading session as the technical signal is still weak. - Reuters

Source