RTRS:PRECIOUS-Gold reverses losses, up 1 pct as jewellers buy
* Gold to fall further to $1,534.49 -technicals
* Coming Up: U.S. initial jobless claims weekly; 1230 GMT
(Updates prices, adds Vietnam imports, quotes)
By Lewa Pardomuan
SINGAPORE, Sept 29 (Reuters) - Gold jumped 1 percent on
Thursday as jewellers rushed to buy after prices dropped early
in the session, but declines in other markets could cap gains as
uncertainty about a resolution of Europe's debt crisis stoked
fears for global growth.
Stocks fell in Asia and copper futures dropped more than 5
percent on mounting worries that Europe's debt problems will
plunge the world economy into a second financial tailspin.
Spot gold added $18.09 an ounce to $1,625.99 by 0608
GMT, having fallen to a low around $1,582. It had plunged to a
two-month low of $1,534.49 on Monday -- down from a lifetime
high around $1,920 an ounce struck in early September.
"The dollar is likely to strengthen on a broad scale, at
least short-term. That's definitely going to be weighing on
performance. Closer to the 200-day daily moving average, we
should find the bottom and I think that's still there," said
Dominic Schnider, an analyst at UBS Wealth Management.
"But I am confident that with lower prices, you are going to
see very strong jewellery offtake, especially as we head towards
Diwali on October 26," said Schnider, referring to the Hindu
festival of lights in main gold consumer India.
U.S. gold futures GCcv1 rose $8.7 to $1,626.8 an ounce.
The euro gained on short-covering in volatile,
commodity-driven trade after riskier assets bounced off intraday
lows on Thursday, but was still on track to mark its worst
quarter since early 2010, with traders preparing for further
falls.
The uncertainties about global economic growth, mainly
sparked by the lack of consensus on a lasting solution to the
euro zone debt crisis, have driven gold prices to record highs
since July.
But declines in other markets prompted speculators to cash
in to cover losses, and investors were spooked by a revolt
within the government of German Chancellor Angela Merkel ahead
of a vote to expand Europe's bailout fund on Thursday.
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Lower gold prices stirred up buying in Asia, sending
premiums for gold bars to their strongest since at least
February in Singapore and Hong Kong. In India, the premiums
jumped to their highest in a year.
Traditionally in India, retail gold demand gains pace from
the month of August when the festival and wedding seasons start,
culminating with the Diwali.
Gold jewellery is an essential part of the dowry basket that
Indian parents give their daughters at weddings.
"Clients have called and told me they want to buy gold bars
at whatever premiums. That is if you could find gold bars," said
a physical dealer in Singapore. "I don't sell anything to
Vietnam because there's no gold available."
The State Bank of Vietnam has granted quotas for gold
companies and banks to import four to five tonnes of the
precious metal this week in an effort to narrow the gap between
domestic and world prices, an industry source said on Thursday.
This is the fourth time that such imports have been
authorised since August, with the last one a week ago.
"Physical demand is still there. Everyone in Asia is buying.
Everybody is buying gold and they want delivery," said another
physical dealer in Singapore.
"We have stocks of gold bars, but it's not enough to satisfy
demand," said the dealer, adding that buyers came from India,
Singapore, Indonesia and Thailand.
Gold's steep correction, however, has not yet unnerved
investors in the No. 1 gold exchange-traded fund, SPDR Gold
Trust.
Holdings of the largest gold-backed exchange-traded-fund
(ETF), New York's SPDR Gold Trust , and that of the largest
silver-backed ETF, New York's iShares Silver Trust
remained unchanged on Wednesday from Tuesday.
