Gold eases on technical selling

NEW YORK/LONDON Mon Jan 9, 2012 3:30pm EST

An employee picks up a gold bar at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna August 26, 2011. REUTERS/Lisi Niesner

An employee picks up a gold bar at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna August 26, 2011.

Credit: Reuters/Lisi Niesner

NEW YORK/LONDON (Reuters) - Gold eased on

Monday, breaking ranks with equities and the euro which it had tracked closely for two months, as bullion investors focused on technical resistance and kept fretting about the euro zone debt crisis.

Gold rose in early trade, then surrendered those gains as Germany and France warned Greece it will get no more bailout funds until it agrees with creditor banks on a bond swap.

The precious metal fell even as the euro rebounded from a 16-month low against the dollar. Gold had traded in virtual lockstep with the euro in the last two months.

Gold faces technical resistance at its 200-day moving average at $1,633 an ounce, after a late December sell-off that briefly sent it into a bear market, analysts said.

"There is so much bearishness in the market that gold prices would be much lower if it weren't for the Eurozone debt crisis and rising tensions between Iran and the western nations," said Carlos Perez-Santalla, precious metals broker at PVM Futures.

Spot gold was down 0.4 percent at $1,610.19 an ounce by 2:40 p.m. EST (1940 GMT). Last week, gold posted its biggest weekly gains in 5 weeks.

U.S. February gold futures for February delivery settled down $8.70 an ounce at $1,608.10. Trading volume was largely in line with its 30-day average.

Gold's 30-day implied volatility has dropped to around 19 from a high of 25 in mid-December, due to recovering prices and general investor disinterest, said COMEX gold options floor trader Jonathan Jossen.

In the short term, technical analysts are watching whether gold can retake the 200-day moving average -- just above $1,633 an ounce -- it fell through in mid-December.

Adam Sarhan, CEO of Sarhan Capital, said gold's 200-day moving average, a support it had held for three years, has now become resistance. Bullion was likely to trade lower until it can break above that level, he added.

Other analysts said gold's technical outlook reminded them of its slump in 2008, the last time gold breached 200-day average support. Then, it briefly plunged to $680 an ounce after surging past $1,000.

While rock-bottom interest rates and worries over debt and growth should support gold prices longer term, the 10 percent drop in December has fed doubt about whether it can revisit last year's record high, analysts said.

"Physical demand has improved but we don't think it will push the price much higher than $1,650...," said Standard Bank analyst Walter de Wet.

PLATINUM'S RECORD DISCOUNT TO GOLD

Among other precious metals, silver was up 0.8 percent at $28.94 an ounce, while platinum was up 1.5 percent at $1,420.55 an ounce and palladium was up 0.5 percent at $615.72 an ounce.

Gold retained its unusual premium over platinum into a sixth month in January, after hitting parity with the white metal in August for the first time in 2-1/2 years.

The gold/platinum ratio, or the number of platinum ounces needed to buy an ounce of gold, reached its highest in more than 25 years on Monday, at 1.16.

Deutsche Bank said in a note that it forecast platinum to trade at a discount to gold throughout 2012 as a negative global growth outlook will weigh on platinum group metals.

(Editing by David Gregorio)

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