February 9, 2012 / 4:15 AM / 9 years ago

PRECIOUS-Gold edges up on Greek hopes, China inflation

* Higher-than-expected China inflation supports gold
    * Gold-silver ratio dips to three-month low around 51
    * Spot gold could fall to $1,698- technicals 
    * Coming up: ECB rate decision; 1245 GMT

 (Adds comment, details; updates prices)	
    By Rujun Shen	
    SINGAPORE, Feb 9 (Reuters) - Gold edged higher on
Thursday, buoyed by a euro strengthened by  hopes Greece was
moving closer to a bailout deal, and surprisingly strong China
inflation also supported sentiment.	
    Greek political leaders have agreed on all points of a
bailout package except one -- pension cuts -- and officials said
discussions with international lenders would continue so a deal
could be concluded before a meeting of euro zone finance
ministers on Thursday.  	
    Bailing out Greece will boost the euro against the dollar
for a while, making dollar-denominated assets such as gold
cheaper and more attractive, traders said. This would help gold
maintain its appeal even if the Greek deal diminishes its safe
haven status. 	
    "Greece seems to be closer to a concrete deal, which weighs
on the dollar and helps gold," said Ronald Leung, a physical
dealer at Lee Cheong Gold Dealers in Hong Kong.	
    Spot gold edged up 0.1 percent to $1,735.69 an ounce
by 0803 GMT, recovering from an intra-day low of $1,725.49. U.S.
gold inched up 0.4 percent to $1,738.60.	
    Gold was also boosted by a stronger-than-expected inflation
reading out of China, which investors said may mean the central
bank will hold off on aggressive monetary easing for now. But
many economists expect inflation to ease February onwards,
leaving China's policy of targeted monetary and fiscal easing
    Gold is seen as a good hedge against inflation, and is
regarded as a good investment when accommodative monetary
policies raise the outlook for price increases.	
    Technical analysis suggested that spot could fall to $1,698
an ounce during the day, said Reuters market analyst Wang Tao.
    Though Greece is widely expected to reach a deal with its
international lenders on the bailout deal, its troubles are
likely to go on, supporting safe-haven interest in gold in the
longer term, analysts and traders say.	
    Later in the day investors will focus on what the European
Central Bank is willing to do to help Greece when it holds its
monthly policy meeting, with interest rates expected to stay on
hold ahead of a major funding operation later this month.
    "Gold is likely to remain in a sideways mode for a while
between $1,700 and $1,800, unless we see any big surprise that
could indicate a clear direction," said Hou Xinqiang, an analyst
at Jinrui Futures in the southern city of Shenzhen.	
    The gold-silver ratio dipped to around 51, its lowest level
in more than three months. 	
    Spot silver edged down 0.2 percent to $33.90.	
    Asia's physical gold market remained subdued, as market
participants await a clear direction out of the Greek debt saga.	
    "We don't see much scrap and buying has cooled after prices
rebounded, as everyone is in wait-and-see mode," said Leung of
Lee Cheong.	
      Precious metals prices 0803 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1735.69    2.30   +0.13     10.99
  Spot Silver        33.90   -0.06   -0.18     22.43
  Spot Platinum    1655.93   -4.56   -0.27     18.88
  Spot Palladium    713.72    3.22   +0.45      9.38
  COMEX GOLD APR2  1738.60    7.30   +0.42     10.97        19180
  COMEX SILVER MAR2  33.95    0.24   +0.72     21.60         2720
  Euro/Dollar       1.3285
  Dollar/Yen         77.22
  COMEX gold and silver contracts show the most active months 
 (Editing by Miral Fahmy)
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