RTRS:PRECIOUS-Gold edges lower as euro zone fears ease
* Gold still on track for second weekly rise
* India buying active, supporting prices
* Coming Up: Italy bond auction
(Adds comment, updates prices)
By Rujun Shen
SINGAPORE, Jan 13 (Reuters) - Gold drifted lower on
Friday as fears about the health of the global economy abated
after successful debt sales by Spain and Italy encouraged
investors to put their money in riskier assets.
Spot gold fell as much as nearly 1 percent to an intra-day
low of $1,634.34 an ounce, before paring some losses after the
euro resumed a rally and the dollar weakened against a basket of
currencies.
Despite the losses, bullion was still headed for a second
straight week of gains on safe-haven buying as investors fretted
about the euro zone debt crisis and tensions between Iran and
the West, amid fresh fund inflow at the beginning of the year.
Strong demand from India, the world's top gold consumer,
also supported sentiment.
Analysts said gold was likely to retain its allure as the
relief over Europe's sovereign debt trouble after the successful
sales of Spanish and Italian debt on Thursday may be temporary.
"The recent headlines from the euro zone and the United
States have not offered signs of essential change on the
fundamentals of those economies," said Hou Xinqiang, an analyst
at Jinrui Futures in Shenzhen.
"Before we see any substantial change, gold prices are
likely rangebound with $1,660 being the key resistance."
After a spate of upbeat data in recent weeks, latest U.S.
data showed that retail sales rose at the weakest pace in seven
months in December and jobless benefits rose last week,
suggesting the economic recovery is shaky.
Spot gold slipped 0.1 percent to $1,648.04 an ounce
by 0738 GMT, on course for a weekly gain of nearly 2 percent.
U.S. gold rose 0.1 percent to $1,649.60.
Technical charts suggest spot gold could fall towards $1,600
during the day, said Reuters market analyst Wang Tao.
CONSOLIDATION PHASE
Gold may remain in a consolidation phase in the first
quarter after hitting a record high above $1,920 in September,
but prospects of further monetary easing in the world's major
economies offered hopes for further price gains later in the
year, analysts said.
"The longer term is still positive for bullion," said a
Singapore-based trader.
"Risk of quantitative easing, Europe's debt worries, central
bank appetite and peak consumption season in India are likely to
make for an upward market trend longer term, but we expect that
upward trend to be very noisy."
The Indian rupee rose to a five-week high on
Friday, boosting the purchasing power of the world's largest
gold consumer, just as its wedding season restarts this weekend.
Other precious metals also came under pressure after sharp
gains earlier in the week. Spot silver dropped 0.4
percent to $30.14 an ounce after four straight sessions of
gains, and was on course for a weekly rise of nearly 5 percent.
Spot platinum edged down 0.2 percent to $1,487.74,
but still headed for a weekly rise of more than 6 percent on
supply concerns sparked by power shortage in South Africa, the
world's top producer of the metal.
Precious metals prices 0738 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1648.04 -1.76 -0.11 5.39
Spot Silver 30.14 -0.12 -0.40 8.85
Spot Platinum 1487.74 -3.25 -0.22 6.80
Spot Palladium 631.97 -4.28 -0.67 -3.15
COMEX GOLD FEB2 1649.60 1.90 +0.12 5.28 23095
COMEX SILVER MAR2 30.14 0.01 +0.04 7.95 3949
Euro/Dollar 1.2869
Dollar/Yen 76.71
COMEX gold and silver contracts show the most active months
