* Gold climbs above $1,675/oz as euro swings higher
* Markets await outcome of Greek debt talks
* Palladium outperforms platinum on Norilsk comments
(Updates with comment, refreshes prices)
By Jan Harvey and Amanda Cooper
LONDON, Jan 23 Gold hit six-week highs on
Monday as the euro recovered against the dollar and other
commodities climbed, with confidence in the precious metal
rising after it recorded three straight weeks of gains for the
first time since November.
Gold prices have risen by some 7.0 percent since the end of
December, but analysts warned the metal could lose traction if
more bad news on the euro zone knocks the euro lower versus the
Spot gold was up 1.1 percent at $1,675.99 an ounce at
1550 GMT, having earlier hit a high of $1,677.10. U.S. gold
futures for February delivery were up $12.5 an ounce at
"Gold is part of a wider rally in commodities and risk
appetite," Daniel Smith, analyst at Standard Chartered said.
"Gold has done pretty well since hitting the lows back in
late December. I felt it would rally because it just seemed
oversold to me and obviously we have seen some kind of upturn
from the physical side of things, which has helped ... I think
we will get to $1,700 and then maybe get a bit more
consolidation," he said.
The euro traded at a near three-week high against the dollar
on Monday as a squeeze on short positions added to last week's
momentum, signaling that markets had become cautiously
optimistic that Greece can cut a deal on a key debt swap.
Germany and France pressed on Monday for a rapid deal
between Greece and its private creditors that returns its
soaring debt to sustainable levels and said they remained
committed to a new bailout that is needed by March to avert a
Despite this, prices of raw materials like crude oil and key
industrial metals firmed on Monday. Brent crude rose by
more than $1 a barrel and copper gained 1.7 percent.
U.S. stocks were little changed in early trading on Monday
after equities posted their best week in a month as the euro
zone debt crisis and the U.S. economy showed signs of
Safe-haven German Bund futures fell on Monday, along with
U.S. Treasury prices.
CHINESE GOLD BUYERS TAKE A HOLIDAY
Money managers, including hedge funds and other large
speculators, raised bullish bets on gold to a one-month high at
116,978 lots, while they boosted their exposure in silver to the
highest level since late November 2011, data from the U.S.
Commodity Futures Trading Commission showed.
"The slow grind higher in gold speculative positioning on
Comex reflects the cautious optimism that appears to dominate
market sentiment at the moment," said UBS in a note.
"That investors have become friendlier to gold is clear, but
as gold's correlation with risk and the euro remains strongly
positive - although easing somewhat - longs are likely to remain
more tentative than aggressive given the still-uncertain
On the physical side of the market, Indian gold demand
firmed as the stronger rupee increased local buyers' purchasing
power for the dollar-priced metal.
Volumes were light elsewhere as markets closed in China -
the world's number two gold consumer - Singapore, Malaysia and
Indonesia for the Lunar New Year break.
Silver was up 0.8 percent at $32.40 an ounce,
tracking gains in gold. Spot platinum was up 1.3 percent
at $1,550.00 an ounce, while spot palladium was up 1.0
percent at $680.50 an ounce.
The platinum/palladium ratio - the number of palladium
ounces needed to buy an ounce of platinum - held near its lowest
since early January on Monday at 2.26, having fallen from the
one-year high it hit in late November at 2.71.
"Palladium outperformed platinum, partly owing to comments
from Norilsk Nickel's CEO that the company will reduce
production this year due to a slight fall in global metal
demand," said Morgan Stanley in a note.
(Editing by William Hardy)