Gold firms in choppy trade despite euro drop
NEW YORK (Reuters) - Gold posted moderate increases on Thursday, as investors saw a buying opportunity the day after the precious metal slid to a six-week low.
Gold trade was choppy. The market slid briefly with the euro on comments by the European Central Bank chief about a potential bailout of Greece. It then drew support from relatively firm equities and oil markets.
Gyrations in the euro, oil and U.S. equity prices batted gold around unchanged readings for much of the session, with options expirations contributing to futures price volatility.
Spot gold stood higher at $1,094.25 an ounce by 3:00 p.m. EDT against $1,086.50 late in New York on Wednesday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange COMEX April ended $4.10 stronger at $1,092.90 an ounce.
Traders also noted stronger physical demand for bullion after the recent price drop, especially in India.
Just before COMEX gold closed, European Central Bank President Jean-Claude Trichet's comments about Greece's debt problems triggered euro selling that briefly pressured gold.
The euro renewed its descent to a 10-month low against the dollar after Trichet, ahead a European Union summit, said it would reflect negatively on Europe's ability to handle its problems if the IMF took the lead in aiding Greece.
In a commentary for Frankfurter Allgemeine Zeitung, Trichet said it was in countries' own interests to put their public finances back on solid footing.
Renewed selling of the euro weighed on gold, but some investors saw price dips as a buying opportunity.
"It's really been a back and forth movement. But after Trichet made those comments gold came under renewed pressure after the dollar rallied and the euro broke down," said David Meger, vice president and director of metals trading at Vision Financial Markets in Chicago.
U.S. stocks rose in early trade, which helped gold retain a firmer footing, said Meger. Wall Street closed flat, but by then gold had already settled. .N
U.S. crude futures slipped late, settling slightly lower, when the euro weakened against the dollar following Trichet's comment's. But crude was also higher at the time gold futures trading ended. <O/R>
Gold "has held up pretty well during this recent dollar rally but I suppose again it is due to the two factors pulling it -- sovereign debt worries against a stronger dollar," said Ole Hansen, senior manager at Saxo Bank.
The precious metal has also met with good buying interest on the physical side as prices fell, traders said.
Dealers reported physical demand for gold in India, the world's biggest bullion consumer, rose after prices fell to attractive levels, as traders resumed buying to stock up for the wedding season that begins in April.
"We are still seeing safe-haven buying of small coins and bars, and as prices drop we see good physical demand in general, which is absorbing some selling in the market," said Commerzbank senior trader Michael Kempinski.
Silver tracked gold higher, trading at $16.68 an ounce from $16.57 late in the prior session.
Precious metals participants also kept an eye on the CFTC public hearing on futures and options in metals in Washington.
The top U.S. futures market regulators heard protests from exchanges and traders who said limiting metals speculation could harm markets. Others questioned whether the agency has the authority to impose such restrictions.
Platinum was higher at $1,605.50 an ounce against $1,577, while palladium was at $451 against $442.50.
Both platinum group metals have taken support from expectations for a recovery in car demand this year. Both are used in autocatalysts.
(Additional reporting by Jan Harvey in London, Editing by David Gregorio)