LONDON: Gold rose on Thursday, benefitting from its appeal as a safe haven as political tension escalates between Iran and the West, although gains were capped by a weak euro as concerns about the euro zone debt crisis persisted. Spot gold rose 0.2 percent to $1,613.29 an ounce by 1024 GMT from $1,610.60 late in New York on Wednesday. The precious metal earlier hit its highest intraday level since Dec. 21 at $1,625.36 an ounce. Growing tension between Iran and Washington and its allies over Iran's nuclear programme have heightened political uncertainty in the region, helping fuel a rally in gold and lifting crude prices. U.S. gold rose 0.1 percent to $1,614.60 an ounce. "Gold is not able to go much higher because the dollar is up, but at the same time we have the uncertainties both from the oil market ... which should be lending a hand," Saxo Bank senior manager Ole Hansen said. "We may need to see a bit more stabilisation in prices before the market starts to look towards more gains." The euro dropped to a 15-month low against the dollar on persistent concerns about the debt crisis. A strong dollar makes dollar-priced commodities more expensive for holders of other currencies. A French bond auction drew solid demand on Thursday, with the market now looking towards debt sales from Spain and Italy next week to gauge the appetite for peripheral euro zone debt in the wake of the region's growing crisis. LUNAR NEW YEAR Gold demand usually picks up ahead of the Lunar New Year, which falls on Jan. 23 this year, in China and elsewhere in Asia, traders said. "We are seeing Chinese banks on the bid ahead of the Chinese New Year," a Singapore-based trader said. Physical dealers in Hong Kong reported purchases from funds, albeit in small volumes, and supply is likely to improve next week as refineries resume operations after the New Year break. Exchange-traded funds, however, have yet to see a pick-up in investment interest. Holdings of SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, remained unchanged at 1,254.57 tonnes for the seventh session. GOL/ETF Investors are also likely to watch for further evidence of the pace of economic recovery in the United States, with the ADP national employment report due later on Thursday ahead of the key non-farm payrolls report on Friday. Silver fell by 0.3 percent to $29.06 an ounce, while platinum slipped to $1,412.99 an ounce. Palladium eased to $641.50 an ounce. "As gold becomes more expensive, the much-regarded gold/silver ratio has risen to 55. Although silver has gained considerable ground in recent days in gold's slipstream, there has been a clear upwards trend in the gold/silver ratio for some months now," Commerzbank analysts said in a note.

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