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PRECIOUS-Gold gains 1 pct as debt worries persist

Published 07/22/2011, 05:08 PM
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* Gold gains on worries about bailout plan for Greece

* Spot gold approaches $1,609.51/oz record set on Tuesday

* Reuters poll raises 2011 avg gold forecast to $1,510/oz

* Oslo explosion augments risk, uncertainty purchases (Updates prices, adds quotes, detail, background)

By Carole Vaporean

NEW YORK, July 22 (Reuters) - Gold rose about 1 percent on Friday, having neared its all-time peak as reservations over a bailout plan for Greece and concerns about a lack of agreement on the U.S. debt ceiling spurred safe-haven buying.

"Gold is drawing strength from the European bailout plan and investor nervousness about whether this is going to result in a real resolution. The gold market is voting no," said Sterling Smith, a Country Hedging analyst in St. Paul, Minnesota.

Adding to the uncertainty and to investor interest in less-risky assets was a bomb attack and shooting in Norway that altogether killed at least 17 people. [ID:nL6E7IM13E]

"Norway was a bit supportive to gold and it will keep the sellers out, especially heading into the weekend," Smith said.

Spot gold reached $1,607.01 an ounce, its highest since setting a record of $1,609.51 on Tuesday, and steadied around $1,602.76 an ounce by 3:46 p.m. EDT (1946 GMT) from $1,587.90 late on Thursday.

In New York, benchmark August gold futures , which trade on the COMEX exchange, gained $14.50 to settle at $1,601.50 an ounce, a 0.91 percent rise. Prices increased slightly in after-hours trade.

COMEX gold activity was healthy with volume about 20 percent greater than the 30-day average, according to preliminary Thomson Reuters data.

Gold prices have risen more than 12 percent so far this year.

Analysts, on average, increased their forecasts for the gold price both this year and next, given debt concerns on both sides of the Atlantic, though platinum and palladium may struggle to make major gains.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Poll-Gold price forecasts rise [ID:nL6E7IM0GL]

Poll-Platinum, palladium will struggle [ID:nL6E7IM0HH]

Reuters Insider show on gold: http://r.reuters.com/tym72s

Asset returns in 2011: http://r.reuters.com/suz52s

Gold correlation with dollar: http://r.reuters.com/ryx52s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The rise in gold along with a firmer dollar against the euro indicated that market players were moving into safe-haven assets.

The euro slipped as investors focused on how the second debt rescue package for Greece and steps to stop the European debt crisis from spreading would be implemented. [USD/]

"We had an agreement, and now players want to look at the details," said Georgette Boele, head of forex and commodities research at ABN Amro.

"If they are getting confident that the agreement is good, you will probably get a new wave of confidence in the markets in general and that will put gold under pressure," she added. [GVD/EUR]

U.S. negotiators have struggled to agree on terms for raising the government's $14.3 trillion debt ceiling. If talks fail by the Aug. 2 deadline, the world's biggest economy would be unable to pay its bills.

The speaker of the U.S. House of Representatives, John Boehner, told fellow Republicans on Friday there was still no deal to avert a debt default, but that talks continued, a senior party member said. [ID:nWEN5916]

U.S. President Barack Obama told a town hall meeting he was sure Congress would reach a deal to avert default. [ID:nN1E76K2FL]

A biannual Reuters survey of leading analysts' and traders' price forecasts showed that most expect the precious metal to keep rising this year and next. [PREC/POLL]

Respondents forecast a median average gold price of $1,510 an ounce for this year, rising to $1,575 an ounce in 2012.

Among other precious metals, silver was bid at $40.06 an ounce against $39.28, having tracked gold to 2-1/2-month highs earlier this week.

"Recovering industrial demand due to stronger global economic growth anticipated for 2011 should be the key driving factor which will see silver outperforming gold," Credit Agricole said in a note.

Platinum was at $1,791.74 an ounce versus $1,781, and palladium at $802.66 an ounce against $805.47. Prices at 3:34 p.m. EDT (1934 GMT)

LAST/ NET PCT YTD

CLOSE CHG CHG CHG US gold 1601.50 14.50 0.9% 12.7% US silver 40.122 1.175 0.0% 29.7% US platinum 1798.40 10.60 0.6% 1.1% US palladium 806.40 -2.60 -0.3% 0.4% Gold 1600.89 13.09 0.8% 12.8% Silver 40.05 0.77 2.0% 29.8% Platinum 1789.45 8.45 0.5% 1.2% Palladium 804.15 -1.32 -0.2% 0.6% Gold Fix 1602.00 14.00 0.9% 13.6% Silver Fix 39.67 -11.00 -0.3% 29.5% Platinum Fix 1793.00 8.00 0.4% 3.6% Palladium Fix 807.00 2.00 0.2% 2.0% (Additional reporting by Jan Harvey in London; Editing by Dale Hudson, Lisa Shumaker and Sofina Mirza-Reid)

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