March 30, 2012 / 1:00 AM / 7 years ago

PRECIOUS-Gold hovers around $1,660/oz; traders eye euro zone meet

* Spot gold headed for 6-pct quarterly gain, 2-pct monthly
fall
    * Physical demand remains weak in Asia
    * Coming Up: Euro zone finance ministers' meeting

 (Updates prices)	
    By Rujun Shen	
    SINGAPORE, March 30 (Reuters) - Gold was trapped in a tight
range around $1,660 an ounce on Friday, ahead of a meeting of
euro zone finance ministers that may boost the bloc's bailout
power, and sluggish physical demand weighed on sentiment.	
    Spot gold rallied to a two-week high near $1,700 earlier in
the week after U.S. Federal Reserve Chairman Ben Bernanke
defended the low interest rate policy and cautioned it was
premature to declare victory on economic recovery, triggering
hopes for further monetary easing.	
    But the momentum faded fast, and prices dropped to a
one-week low just below $1,645 in the previous session before
recovering to $1,661.60 an ounce by 0634 GMT.	
    Spot gold was on course for a quarterly rise of 6
percent, after a slide of 3.6 percent in the last quarter of
2011, but it was headed for a monthly loss of 2 percent, its
second straight month in the red.	
    U.S. gold gained half a percent to $1,660.70 an
ounce.	
    Gold has been stuck in range of roughly $1,630 to $1,700 in
recent weeks, as investors try to digest mixed signals from
policymakers. Sluggish physical demand has dampened the mood in
gold.	
    "We don't expect to see real physical demand until prices
drop below $1,600," said a Singapore-based dealer.	
    "The physical market has stopped playing an important
supportive role. There is so much physical material, yet we
don't see any good offtake, as people are worried that it's not
the right time to invest in gold now."	
    He said the cautious tone in the market might last until the
second quarter due to the uncertainty around global growth.	
    Market participants will wait for China's official
purchasing managers' index data on Sunday, to gauge the chance
of a further slowdown in the world's second-largest economy.	
    A cooling economy and easing inflation could take the shine
off gold, which has attracted explosive investor interest in the
past few years in China.	
    The World Gold Council expects the country to displace India
 as the world's biggest gold consumer this year.	
     	
    EUROPE BACK IN FOCUS	
    The euro firmed against the dollar on Friday, as investors
expect the euro zone finance ministers' meeting later in the day
 to deliver an agreement on temporarily almost doubling the
bloc's bailout capacity as one of the final moves to end the
sovereign debt crisis.  	
    "We could see gold post gains in April as it is the
beginning of the new quarter, but gains will be moderate as
demand is likely to be sluggish," said Li Ning, an analyst at
Shanghai CIFCO Futures.	
    Li said investors would watch for signs of substantial
progress in the euro zone, which could strengthen the euro,
weaken the dollar and support gold. A cheaper greenback makes
dollar-priced commodities more attractive to buyers holding
other currencies.	
    The euro zone will witness elections in Greece and France in
the second quarter, and April will see large refinancing needs
from nations in the region.	
    Spain will unveil deep budget cuts on Friday despite stiff
popular resistance, increasing concerns that austerity measures
demanded by the EU will only push the economy deeper into
recession.  	
   	
    Precious metals prices 0634 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1661.60    0.72   +0.04      6.25
  Spot Silver        32.29    0.08   +0.25     16.61
  Spot Platinum    1633.94   10.99   +0.68     17.30
  Spot Palladium    647.42    4.47   +0.70     -0.78
  COMEX GOLD APR2  1660.70    8.50   +0.51      5.99          444
  COMEX SILVER MAY2  32.29    0.29   +0.92     15.65         1844
  Euro/Dollar       1.3358
  Dollar/Yen         81.97
  COMEX gold and silver contracts show the most active months
  	
	
 (Editing by Clarence Fernandez)
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