PRECIOUS-Gold holds steady amid China absence and stronger dollar

Mon Feb 3, 2014 2:52am EST

* China, Hong Kong closed on Monday for lunar new year
    * Euro near 10-week lows against the dollar
    * Emerging market strains may increase gold safe-haven bid

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Feb 3 (Reuters) - Gold was little changed in
Asian trading on Monday, after posting its first loss in six
weeks, as the strength in the U.S. dollar and the absence of key
buyer China weighed on prices. 
    Markets in China, the world's biggest buyer of bullion, are
closed until Friday for the Lunar New Year holiday. Hong Kong, a
major trading hub, is shut on Monday.
    Traders said until China comes back, the focus during Asian
hours will be on any developments in the emerging markets, where
the U.S. economic growth and the Federal Reserve's move to taper
stimulus have caused capital outflows. 
    "The uncertainty over a global economic recovery, despite
the obvious uptick in the U.S. economic outlook, remains to be
the missing jigsaw puzzle piece in determining gold price trend
in 2014," OCBC analysts said in a note. 
    They said more trouble in emerging markets could increase
gold's appeal as a safe haven. 
    "In addition, the surprise surge in Chinese gold demand,
should it persist, may provide support for gold at least at its
$1,200 per ounce handle at this juncture." 
    Spot gold was unchanged at $1,243.10 an ounce by 0744
GMT. Bullion fell 2 percent last week - its first loss since the
week ended Dec. 20. 
    Asian shares lost more ground on Monday as strains in
emerging markets show little sign of abating, while growing
pressure for another policy easing in Europe shoved the euro to
10-week lows. The dollar index recorded its best monthly gain in
8 months in January. 
    Chinese demand was robust earlier this year until the last
week of January as consumers bought gold for good fortune and as
gifts for the lunar new year.
    Premiums in Shanghai had fallen to $4 just before the
holiday from over $20 in the beginning of the month, indicating
a drop in buying interest.
    "Seasonality shows that the Shanghai-London price
differential, a key measure of the strength of Chinese domestic
demand, is likely to remain weak over the next two weeks," said
ANZ, adding gold will not be able hold rallies without China.
    In other news from the physical markets, sales of the U.S.
Mint's American Eagle gold coins fell 40 percent year-on-year in
January, typically the busiest month of the year, as uncertainty
over bullion prices continued to dampen interest from
collectors. 
    The Perth Mint's gold and silver sales climbed in January
from the previous month as demand for coins and bars remained
robust after a sharp drop in prices last year. 
    
    PRICES AT 0744 GMT     
 Metal             Last      Change   Pct chg
                                               
 Spot gold           1243.1    -0.09      -0.01
 Spot silver          19.11     0.01       0.05
 Spot platinum       1377.7     2.95       0.21
 Spot palladium       704.2      3.2       0.46
 Comex gold          1242.8        3       0.24
 Comex silver        19.115   -0.005      -0.03
 Euro                1.3481                    
 DXY                 81.296                    
                                               
 COMEX gold and silver contracts show the most
 active months
 
 (Reporting by A. Ananthalakshmi; Editing by Michael Perry and
Subhranshu Sahu)
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