PRECIOUS-Gold rises over 1 pct on Greek deal uncertainty

Tue Feb 21, 2012 3:39pm EST

Related Topics

(Updates with comment, market activity)	
    * Gold rallies as Greek deal increases economic uncertainty
    * Oil rally spurs inflation worries, China, Fed easing
supportive
    * Silver up despite drop in Chinese imports
    * Coming up: U.S. existing home sales Tuesday

    By Frank Tang and Amanda Cooper	
    NEW YORK/LONDON, Feb 21 (Reuters) - Gold rose more
than 1 percent on Tuesday, breaking ranks with the
euro and equities, as a massive European bailout deal had
investors buying the metal amid doubts the bailout will work.	
    Gold rallied to its highest in more than two weeks after 
euro zone finance ministers agreed a 130-billion-euro ($172
billion) rescue for Greece. Analysts said the deal bought time
for the single-currency bloc but left deep doubts about Greece's
ability to recover and avoid default.	
    Bullion has benefited from news that China recently cut its
required reserve ratio and committed to help the euro bloc. The
metal already received a strong boost after the U.S. Federal
Reserve last month said it would keep rates near zero at least
until late 2014.	
    "Gold gets a boost from the EU kicking the can down the
road," said Rob Kurzatkowski, senior commodity analyst at
optionsXpress.	
    "Not only does the bailout perhaps delay the inevitable
(Greek bankruptcy), but it also opens the door for higher
inflation across the euro zone," he said.	
    Spot gold rose 1.3 percent on the day to $1,755.81 an
ounce by 3:01 p.m. EST (2001 GMT), having earlier hit a high of
$1,757.40, the loftiest price since Feb. 3.	
    Bullion posted its biggest one-day gain in two weeks.	
    A near $3 rally in U.S. crude futures to nine-month highs
amid possible supply disruptions due to rising tensions between
Iran and the West also boosted gold's inflation hedge appeal.
 	
    U.S. COMEX April futures settled at $1,758.50 an
ounce, up $32.60 from Friday's close as traders returned after
Monday's U.S. Presidents Day holiday.	
    Analysts said gold outperforming the U.S. stock markets and
other riskier assets highlighted underlying inflation worries
and lingering doubts on Greece's ability to avert a chaotic
default in the long run. Both the S&P 500 and euro traded in the
negative territory.	
    However, gold could face strong headwinds as liquidity
appears to tighten for European banks soon.	
    The European Central Bank wants its second offer of cheap
ultra-long funds next week to be its last, putting the onus back
on governments to secure the euro zone's longer-term future.
 	
  	
    GOLD-EURO CORRELATION	
    The positive 30-day log correlation between gold and the
euro has risen to near 0.5 up from 0.3 last week, indicating a
stronger positive link between the two. 	
    "Gold is trading more like the other metals - as a risk
asset, rather than a risk hedge," Citigroup analyst David Wilson
said.	
    Even though gold has at times failed to rally in response to
euro zone debt fears, investors have snapped up almost as much
of the metal through exchange-traded products so far this month
as they did in the whole of January.	
    Holdings of gold in the world's major ETPs are set for a
rise of more than 600,000 ounces so far in February, marking a
second straight month of net inflows. 	
    Silver was up 2.2 percent at $34.29 an ounce,
shrugging off a decline in imports by China.	
    Chinese imports of silver fell to 191.7 tonnes in January,
the lowest in three years. In 2011, China imported a total of
3,575 tonnes of silver, the lowest in four years. 	
    Platinum rose by 2.6 percent on the day to $1,682.74
an ounce, having earlier hit $1,687.50, a five-month high.
Platinum  prices have been boosted by supply worries in South
Africa.	
    Palladium rose 2.0 percent to $705.35 an ounce.	
    	
 3:01 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1758.50  32.60   1.9  1727.00 1759.50  184,493
 US Silver MAR  34.429  1.213   3.7   33.325  34.465   56,697
 US Plat APR   1684.90  51.00   3.1  1639.90 1693.60   11,608
 US Pall MAR    710.75  22.65   3.3   687.50  714.75    6,772
 
 Gold          1755.81  22.29   1.3  1731.90 1757.40         
 Silver         34.290  0.730   2.2   33.510  34.440
 Platinum      1682.74  42.92   2.6  1646.00 1687.50
 Palladium      705.35  13.57   2.0   696.63  711.00
 
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        197,868   197,570   195,199     20.38    0.80
 US Silver       77,842    48,723    43,653     30.42   -1.63
 US Platinum     11,720     7,644     7,655     21.27    0.03
 US Palladium     8,933     4,187     4,151                  
 
 	
	
	
 (Editing by Bob Burgdorfer and Marguerita Choy)
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