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PRECIOUS-Gold steady; currency, Greece vote eyed

Published 06/28/2011, 02:51 AM
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* Gold, silver seen under pressure in short term

* Greece's parliament to vote on austerity plan on Wed

* Coming up: U.S. June consumer confidence; 1400 GMT (Updates prices)

By Rujun Shen

SINGAPORE, June 28 (Reuters) - Spot gold held steady on Tuesday as investors watched moves in the currency market while waiting for a vote by Greece's parliament later this week on an unpopular austerity plan needed to avoid a sovereign debt default.

Gold had traded in a narrow range of barely $6, as the euro steadied and the dollar index weakened slightly as Greece's parliament debates the austerity plan ahead of an expected vote on Wednesday.

The euro had strengthened in early trade on Tuesday after a radical French proposal to have French banks voluntarily rollover Greek debt was put forward, but lost the gains as worries over the outcome of Greek vote returned, showing how quickly sentiment can change on the expected outcome for the debt crisis.

"Gold is facing more downside pressure in the short run, as the dollar is still looking strong in the face of the euro zone debt crisis," said Hou Xinqiang, an analyst at Jinrui Futures in China.

Hou expected $1,470 to be a strong support level, which gold hit in May during the commodity rout that knocked the precious metal off its record high of $1,575.79.

Spot gold barely changed at $1,496.71 an ounce by 0611 GMT, off a five-week low of $1,490.30 in the previous session. U.S. gold was little changed at $1,497.70.

Over the long run, analysts said gold's prospects will remain intact, as economic and fiscal uncertainties on both sides of the Atlantic are expected to continue boosting the appeal of the metal, seen as a safe haven during times of financial distress.

In the latest sign of a weakening U.S economy, consumer spending failed to rise in May, breaking 10 straight months of gains.

Interest in gold-backed exchange-traded funds has stalled. Holdings in the SPDR Gold Trust , the world's largest gold ETF, remained at 1,209.142 tonnes for the past six sessions -- the longest stretch of unchanged holdings since April, 2010.

Spot silver edged up 0.2 percent to $33.59 an ounce, rebounding from a near six-week low of $33.37 reached in the previous session.

U.S. silver also gained 0.2 percent to $33.65.

"Technically silver is in a falling channel, looking to test the key support level around $33," said a Tokyo-based trader, adding that once that level is effectively breached silver could fall further.

"Some industrial users have been buying silver, but it is not enough to push prices back up because investors are not buying."

Investment frenzy helped silver stage a stellar rally earlier this year, before prices crashed more than 30 percent in just six sessions from a record high at $49.51 hit on April 28.

Silver remained the best-performing precious metal, up 9 percent so far this year. Gold gained 5.4 percent, and palladium was the worst performer with a 9-percent decline.

Precious metals prices 0611 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1496.71 0.51 +0.03 5.44 Spot Silver 33.59 0.05 +0.15 8.85 Spot Platinum 1677.15 5.60 +0.34 -5.11 Spot Palladium 724.97 -0.01 -0.00 -9.32 COMEX GOLD AUG1 1497.70 1.30 +0.09 5.37 6757 COMEX SILVER JUL1 33.65 0.06 +0.19 8.76 2714 Euro/Dollar 1.4272 Dollar/Yen 80.73 COMEX gold and silver contracts show the most active months (Editing by Ed Lane)

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