Gold ends flat, supported by Greece, economy worries

NEW YORK Thu Jun 16, 2011 3:46pm EDT

A gold bar carrying the Euro sign is seen during the European Central Bank's Euro Exhibition organised by the Romania's Central Bank in Bucharest March 10, 2011.REUTERS/Bogdan Cristel

A gold bar carrying the Euro sign is seen during the European Central Bank's Euro Exhibition organised by the Romania's Central Bank in Bucharest March 10, 2011.

Credit: Reuters/Bogdan Cristel

NEW YORK (Reuters) - Gold prices ended nearly flat on Thursday, underpinned by safe-haven demand amid fears that Greece's debt crisis may escalate and the U.S. economic outlook will stay weak.

U.S. data gave a mixed picture. A gauge of regional manufacturing activity hit a near two-year low in June, overshadowing improved readings on the labor and housing markets. Gold has risen around 4 percent in the last 30 days after a string of disappointing economic data hit the equity markets.

But bullion drew support from economic uncertainty as international lenders scrambled to save Greece from default, and on uncertainty related to talks over U.S. debt ceiling.

"Greece is facing a number of difficulties and obstacles right now. If it can meet some of these challenges, you will see a flight back to the risk assets and maybe less to safety," said Phillip Streible, senior market strategist with Lind Waldock, a unit of futures broker MF Global.

"For now, gold gets the benefit of being a safe haven."

Spot gold slipped 0.1 percent to $1,527.80 an ounce by 2:44 p.m. EDT (1844 GMT).

The U.S. August futures contract settled up $3.70 at $1,529.90 an ounce, after trading between $1,522 and $1,534. Volume was almost half of its 30-day average, consistent with recently lower levels as investors switched their focus on the volatile equity markets.

The metal is about 3 percent below a lifetime high of $1,575.79 touched in early May.

Greek Prime Minister George Papandreou struggled to quell a revolt in his party against EU/IMF-ordained austerity steps. Worries over the European debt crisis pummeled the euro and pushed to record highs the cost of insuring against default the debt of Greece and several other peripheral euro zone nations.

"The (gold) market has an underlying confidence level based upon what is going on in the Middle East, with the debt crisis, with Greece," said ANZ head of metals sales Peter Hillyard.

Gold priced in euros touched a session high of 1,086.57 euros, just shy of the record 1,088.11 hit in late May.

Bullion also drew support from economic uncertainty as a group of top U.S. lawmakers set an ambitious July 1 goal to reach a broad debt-reduction deal. The Republicans and the White House are still far apart agreeing on how to raise the $14.3 trillion debt limit so the world's biggest economy can avoid default and keep borrowing.

GOLD/SILVER RATIO RISES

Silver was last down 1 percent at $35.40 an ounce, having fallen nearly a third since touching a record $49.51 in April.

BNP Paribas said silver buying would likely be muted over summer on lagging industrial demand, and did not expect the gold/silver ratio to decline back to the low 30s.

The ratio, showing how many ounces of silver can buy one ounce of gold, rose above 43 after falling to just 31 in late April, its weakest since the early 1980s.

Weaker economic sentiment also weighed on platinum group metals. Platinum slipped 0.9 percent to $1,753.74 an ounce, and palladium fell 2 percent to $755.72 an ounce.

Prices at 2:44 p.m. EDT (1844 GMT)

(Additional reporting by Amanda Cooper in London; Editing by Dale Hudson and Alden Bentley)

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