December 5, 2011 / 3:46 AM / 9 years ago

PRECIOUS-Gold steady as euro zone faces crucial week

* Investors eye EU summit on Friday, ECB rate decision on
    * China slows down quickly; needs policy support
    * Coming up: U.S. factory orders, October; 1500 GMT

 (Adds details, comments; updates prices)	
    By Rujun Shen	
    SINGAPORE, Dec 5 (Reuters) - Gold prices traded steady
on Monday, after posting their sharpest weekly rise in more than
a month, as the euro zone kicks off a week packed with meetings
and decisions crucial to a solution to its debt crisis as well
as the euro.	
    The two-year-old debt crisis has not only pushed a few euro
zone nations to the brink of bankruptcy, but also threatened to
split the single currency bloc and sink the global economy. 	
    In a sign that the global economy is slowing, the latest
data showed China's services sector cooled in November to its
weakest growth in three months. 	
    Later in the day, French President Nicholas Sarkozy and
German Chancellor Angela Merkel will meet to align their
positions on closer fiscal integration of the region, before a
European Central Bank meeting and a European Union summit later
in the week.   	
    Although financial markets have rallied recently on a joint
move by central banks to inject liquidity as well as hopes for a
decisive move by the European leadership to fight the debt
crisis, the outcome of the summit is far from certain.	
    "We've witnessed a number of EU summits trying to tackle the
problem, but none of them has been particularly effective," said
Li Ning, an analyst at Shanghai CIFCO Futures.	
    "Fiscal unity is not something that can be agreed upon at
one meeting, as countries have different stands on the issue."	
    Spot gold was little changed at $1,744.95 an ounce by
0655 GMT, after rising nearly 4 percent in the previous week.	
    U.S. gold edged down 0.1 percent to $1,749.10.	
    Gold has the potential to move higher in the short term
after trading in a tight range around $1,750 in the past few
sessions, riding on optimism ahead of the summit, but the rise
may be stemmed at the key resistance level at $1,800, Li added.	
    After China published data showing its vast manufacturing
sector shrank in November, an HSBC purchasing managers' index
showed the world's second-largest economy slowing quickly and in
need of policy support.  	
    "Easing monetary policy may suggest that the government is
comfortable with the current rate of inflation, which is
negative for gold," said a Singapore-based trader.	
    "A lot of gold buying in China has been driven by the
inflation story that was reinforced by the constant reserves
ratio hikes."	
    Bu in the longer term, the easing of monetary policy raises
the inflation outlook and benefits gold, seen as a good
inflation hedge.	
    Managed money cut its net long positions in U.S. gold
futures and options for a second consecutive week in the week
ended Nov. 29. The total open interest fell to its lowest in 10
months, suggesting decreased liquidity and trading interest in
the market. 	
    Spot palladium edged up 0.4 percent to $645 an ounce,
extending a 14-percent rise from the previous week -- its
biggest one-week gain in more than three years.	
      Precious metals prices 0655 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1744.95   -0.80   -0.05     22.93
  Spot Silver        32.72    0.16   +0.49      6.03
  Spot Platinum    1543.75   -3.31   -0.21    -12.66
  Spot Palladium    645.00    2.81   +0.44    -19.32
  TOCOM Gold       4381.00    9.00   +0.21     17.48        53649
  TOCOM Platinum   3893.00  -28.00   -0.71    -17.10         9584
  TOCOM Silver       81.80    0.20   +0.25      0.99          378
  TOCOM Palladium  1618.00   17.00   +1.06    -22.84          509
  COMEX GOLD FEB2  1749.10   -2.20   -0.13     23.05        14273
  COMEX SILVER MAR2  32.78    0.09   +0.29      5.95         1616
  Euro/Dollar       1.3417
  Dollar/Yen         77.96
  TOCOM prices in yen per gram. Spot prices in $ per ounce.
  COMEX gold and silver contracts show the most active months
 (Editing by Sugita Katyal)
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