RTRS:PRECIOUS-Gold gives up early gains, euro zone crisis lingers
* Gold to rise to $1,561 an ounce -technicals
* Coming Up: Euro zone current account data for April; 0800
GMT
(Updates prices)
By Lewa Pardomuan
SINGAPORE, June 20 (Reuters) - Gold shed early gains on
Monday but was still supported by debt crisis woes in Europe
after the region's ministers delayed a decision on emergency
loans to Greece, while investors awaited the outcome of a U.S.
central bank meeting that could squeeze the dollar.
Euro zone finance ministers postponed to July a final
decision on extending a further 12 billion euros ($17 billion)
in emergency loans to Greece, saying Athens would first have to
introduce harsh austerity measures.
Spot gold lost $1.44 an ounce to $1,536.96 by 0547
GMT, having risen above $1,541 on Friday -- its biggest one-day
gain since May. Gold is still below a lifetime high around
$1,575 touched in early May.
Investors await the Fed's Open Market Committee's
announcement on interest rates on June 22.
"Investors will be trying to see how far or how high the bar
for the next round of quantitative easing will be. If this bar
is actually lowered, then I think it will be beneficial for
gold," said Ong Yi Ling, investment analyst at Phillip Futures.
"If it is high, then I think gold will still remain in its
current range bounds that we are seeing. I don't think they will
do QE3 now."
Financial markets are bracing for the conclusion at the end
of June of the Fed's quantitative easing, a cheap-money policy
credited with boosting stocks but blamed for sky-high
commodities prices and a weak dollar.
Gold priced in sterling extended gains to hit a
record at 953.41 pounds on Monday, tracking gains in spot gold.
The euro gave up some of its gains of late last week after
euro zone finance ministers said they expected to pay the
further 12 billion euros in emergency loans to Greece by next
month.
But the ministers also agreed that they would seek a
voluntary rollover of Greek debt by private bondholders to
finance a substantial part of Greek funding needs in coming
years.
Recent gains in gold were driven by debt problems in Europe,
inflation fears in China following strong economic data and
worries about a U.S. economic slowdown.
"I think to some extent it was expected they won't be able
to finalise it so soon because it was a pre-condition that
Athens has to introduce all these austerity measures and show a
plan of that sustainability before they get their bailout," said
Ong of Phillip Futures.
"I think for gold, I would still look at resistance at about
the $1,550 to $1,555 level."
Silver hardly moved at $35.64 an ounce, below a
record at $49.51 an ounce in April. Platinum and
palladium gained on firmer equities.
Tokyo stocks on Monday came off a three-month low hit last
week with power companies leading gains after Trade Minister
Banri Kaieda on Saturday called on local governments to give the
green light to restarting nuclear reactors.
"I think the U.S. will maintain the interest rates at low
levels for a little while after the quantitative easing
finishes. I can't tell you whether it's going to be bullish or
not for gold," said a physical dealer in Hong Kong.
"But I guess gold will be stable until the problem in Greece
is solved. There are so many problems to be solved."
The International Monetary Fund cut its forecast for U.S.
economic growth on Friday and warned Washington and debt-ridden
European countries that they are "playing with fire" unless they
take immediate steps to reduce their budget deficits.
Money managers cut their bullish bets in COMEX gold futures
and options after raising them in the past three weeks, as
bullion prices fell during the period, futures regulator
Commodity Futures Trading Commission data showed
Friday.
