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PRECIOUS-Gold eases as Greek optimism offsets dollar lift

Published 06/30/2011, 06:48 AM
Updated 06/30/2011, 06:52 AM
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* Spot gold headed for 1.4-pct monthly loss, 5.5-pct quarterly rise

* Coming Up: Greece's parliament votes on final austerity bill (Updates throughout with comment; refreshes prices; prvs SINGAPORE)

By Amanda Cooper

LONDON, June 30 (Reuters) - Gold buckled under the weight of growing investor appetite for risk on Thursday after Greece looked increasingly likely to push through austerity measures, which offset the potentially bullish impact of a weaker dollar.

The price of gold is on course for an eleventh consecutive quarterly gain during the second three months of 2011.

Gold has over the past three months been a major beneficiary of the investor anxiety over Greece's potential to affect the rest of the euro zone economy, of the triple disaster in Japan and over the outlook for global economic growth.

The precious metal is set for a quarterly rise of 5.5 percent, compared with declines of 1.4 percent in the S&P 500 , 4.8 percent in crude oil and 2.8 percent in emerging equities in this time.

Greece's parliament passed the first of two austerity measures on Wednesday despite escalating street violence. It is expected to vote in favour of the final austerity bill later on Thursday.

Spot gold was down 0.1 percent at $1,509.20 an ounce by 1000 GMT, after rising for two straight sessions. U.S. gold was flat at $1,510.40.

"Gold has got to stay supported, however this plays out. The fact is Greece is bankrupt and some restructuring is inevitable," said Credit Agricole analyst Robin Bhar.

"We are going into the summer season...but I can see gold holding and consolidating. With all these issues still to be addressed and what to do with Greece, I can't see any other way but to remain generally in a broad range."

The dollar lost a quarter of a percent against a basket of currencies, as the euro rallied after Greece moved a step closer to securing international aid.

Normally, weakness in the dollar would give gold a lift as it cuts the cost of buying it for non-U.S. investors. But this inverse link to the currency can sometimes erode.

"If Greece passes the bill, we may see gold test higher tonight," said a Hong Kong-based trader, but added that the upside could be limited at $1,520, around the 50-day moving average.

SAFE SAFE-HAVEN

Gold's safe haven appeal is likely to be retained in the aftermath of the Greek debt crisis, but prices may be trapped in a range in the short run due to lack of speculative interest.

"We need to see if fund buying is coming back, which will largely depend on whether there will be more stimulus plans in the United States after the current round of quantitative easing ends," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers.

So far in the second quarter of the year, investors buying of physical gold, as reflected by changes in holdings of the metal in exchange-traded funds, has picked up relative to the first quarter of the year.

Between March and June so far, some 2.101 million ounces of gold have flowed into the major ETFs, according to Reuters data, compared with an outflow of 2.271 million ounces in the first three months of the year.

Spot silver was last up 0.4 percent at $34.90 an ounce , on course for a 7 percent quarterly loss, its first after nine straight quarterly gains and its worst since the third quarter of 2008 , when the global financial crisis was approaching its most intense .

Spot palladium outperformed the precious metals complex with a 1. 4 -percent rise, but on course for its second straight month of loss es . Palladium remained the worst-performing precious metal this year, down more than 5 percent so far.

Platinum was last down 0.2 percent at $1,720.00 an ounce, having hit three-month lows this week and set for its first quarterly decline in a year, down 2.7 percent in the second three month of 2011. (Additional reporting by Rujun Shen; editing by Keiron Henderson)

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