PRECIOUS-Gold inches up on stimulus support; euro zone weighs

Wed Sep 26, 2012 3:02am EDT

* Euro zone debt crisis returns to spotlight; euro sluggish
    * Gold investment interest boosts; SPDR holdings hit record
    * Coming up: U.S. new home sales; 1400 GMT

 (Adds comments, details; updates prices)
    By Rujun Shen
    SINGAPORE, Sept 26 (Reuters) - Gold edged up on Wednesday as
recent stimulus measures by central banks supported bullion's
appeal as a hedge against inflation, although a firm dollar and
a shift in investor focus to the euro zone debt crisis capped
gains.
    Moves by the European Central Bank and the Federal Reserve
to ease monetary policy propelled gold to a 6-1/2-month high
near $1,790 an ounce last week, but failed to send it above the
key $1,800 level as investors looked for fresh catalysts.
    Spot gold inched up 0.1 percent to $1,762.19 an ounce
by 0643 GMT, after two sessions of losses. U.S. gold 
traded nearly flat at $1,765.10.
    Beyond the immediate consolidation, gold is expected to draw
more interest as investors seek a hedge against loose monetary
policies that create a low interest rate environment and raise
the inflation outlook.
    Also, the latest news of central banks adding to their gold
reserves helped underpin sentiment for bullion. 
    "There aren't many places to go for investors," said a Hong
Kong-based trader. "Buying precious metals seems to be one of
the places for them to step out of fiat money. Everyone that can
be in gold is in gold now."
    Fiat currencies are government-issued and their value is
based on the issuer's guarantee to pay the face amount on
demand. 
    Investment interest in gold has surged over recent weeks,
with holdings in physically backed exchange-traded gold funds
hitting record highs. Speculative net length in U.S. gold
futures and options are at the highest in nearly seven months. 
    But relatively low volatility and high selling interest in
the U.S. gold options market curbed gold's ascent, the
Hong Kong-based trader said.

    EYES ON EURO ZONE, AGAIN
    After the central banks on both sides of the Atlantic
announced their plans on bond purchases, investors are once
again concerned whether these stimulus measures will have the
desired effect of boosting the global economy.
    Protesters in Madrid clashed with police on Tuesday as the
government prepares a new round of unpopular austerity measures
for the 2013 budget to be announced on Thursday. 
    "In the medium to long term, global easing will be the main
support for gold," said Chen Min, an analyst at Jinrui Futures
in the southern Chinese city of Shenzhen.
    "But in the short term, the twists and turns in the euro
zone debt crisis influence the gold market."
    Worries about the euro zone sent the single currency to a 
two-week low against the dollar, while the dollar index 
rose to a two-week high, putting pressure on dollar-priced
commodities by making them more expensive for buyers holding
other currencies. 
    In South Africa, meanwhile, a strike has spread through
AngloGold Ashanti's operations and the majority of its 35,000
workers have walked out. 
    
      Precious metals prices 0643 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1762.19    2.15   +0.12     12.69
  Spot Silver        33.88    0.18   +0.53     22.35
  Spot Platinum    1630.50   10.00   +0.62     17.05
  Spot Palladium    635.50    4.30   +0.68     -2.61
  COMEX GOLD DEC2  1765.10   -1.30   -0.07     12.66        13797
  COMEX SILVER DEC2  33.94   -0.01   -0.02     21.58         4636
  Euro/Dollar       1.2868
  Dollar/Yen         77.72
  COMEX gold and silver contracts show the most active months
 
 (Editing by Chris Gallagher)
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