PRECIOUS-Gold edges up as Italy fear eases; Europe worries linger

Fri Nov 11, 2011 2:38am EST

*  Europe worries linger; physical demand underpins
sentiment
    *  Spot gold technical signals mixed - technicals
 
    *  Coming up: US Thomson Reuters/U. Mich consumer
sentiment, Nov; 1455 GMT

 (Updates prices) 
    By Rujun Shen 
    SINGAPORE, Nov 11 (Reuters) - Gold posted modest gains
on Friday, following encouraging signs that Italy was making an
effort to ease its political turmoil and avert an economic
disaster, while investors remain nervous about the unfolding
euro zone debt crisis. 
    The uncertainty in solving the two-year-old debt crisis is
likely to support safe haven interest in gold, but a widespread
sell-off in response to disastrous news out of the euro zone
could sink gold as investors are forced to liquidate their 
positions to cover losses elsewhere. 
    On Thursday, Italy moved closer to a national unity
government, while benchmark Italian bond yields stabilised after
surging to an unsustainable level the day before, easing fears 
the euro zone's third-largest economy was slipping into an
economic abyss.   
    "The whole situation in Europe still worries people -- Italy
bonds, French bonds, euro zone exit," said a Singapore-based
trader, adding the danger of liquidation could hit gold in the
short term. 
    "I don't think we'll see prices go below $1,700 as physical
demand is expected to resurface if prices drop." 
    Spot gold edged up half a percent to $1,768.60 an
ounce by 0716 GMT, on course for a third straight week of rises
with a 0.8 percent gain. 
    U.S. gold rose 0.6 percent to $1,770.10, on course
for its third straight week of gains. 
    Technical signals for spot gold are mixed as it hovers
around a trendline that rose from the Oct. 20 low of $1,603.49,
said Reuters market analyst Wang Tao. 
  
     
    
    Investment flows into gold-backed exchange-traded funds
continued, even as gold slumped for three consecutive sessions. 
    SPDR Gold Trust, the world's largest gold ETF,
reported a fifth straight day of gains in its holdings --
standing at 1,268.666 tonnes by Nov. 10, highest since late
August.  
    "Given the ongoing high uncertainties and the current risk
aversion, gold should remain well supported despite the latest
price slump," said Commerzbank in a research note. 
    Spot platinum rose 0.7 percent to $1,629.24 an ounce,
and spot palladium climbed as much as 1.4 percent to
$651.5, tracking a rebound in industrial metals.  
 
      Precious metals prices 0716 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1768.60    9.01   +0.51     24.60
  Spot Silver        34.00   -0.06   -0.18     10.17
  Spot Platinum    1629.24   11.50   +0.71     -7.82
  Spot Palladium    645.38    2.58   +0.40    -19.28
  TOCOM Gold       4411.00    3.00   +0.07     18.29        59711
  TOCOM Platinum   4093.00   24.00   +0.59    -12.84        13612
  TOCOM Silver       83.40   -0.50   -0.60      2.96          496
  TOCOM Palladium  1628.00   17.00   +1.06    -22.37          182
  COMEX GOLD DEC1  1770.10   10.50   +0.60     24.53        17396
  COMEX SILVER DEC1  34.04   -0.07   -0.19     10.02         2753
  Euro/Dollar       1.3635
  Dollar/Yen         77.44
  TOCOM prices in yen per gram. Spot prices in $ per ounce.
  COMEX gold and silver contracts show the most active months
  
     
 
 (Editing by Clarence Fernandez)

http://www.reuters.com/