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PRECIOUS-Gold rises 1 pct on fears of Greek default

Published 10/04/2011, 03:08 AM
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* Gold faces resistance at $1,671-$1,674

* Coming Up: U.S. ICSC chain stores yy Weekly; 1145 GMT (Updates prices)

By Lewa Pardomuan

SINGAPORE, Oct 4 (Reuters) - Gold gained 1 percent on Tuesday, rising for a fourth day, as investors dumped equities and turned to bullion on growing fears that a Greek default could trigger another global recession.

As safe-haven buying lifted gold prices, European stock index futures slipped on doubts over Greece's ability to avoid default, copper fell for a fifth day and Brent crude fell more than a dollar to below $101 a barrel.

Credit Suisse raised its 2012 gold price forecast to $1,850 from its prior forecast of $1,540, saying the clear beneficiary of the uncertainty and dislocations in financial markets has further upside with the crises set to continue.

Spot gold rose $16.79 to $1,673.19 an ounce by 0636 -- well below a lifetime high around $1,920 struck in early September.

"The long-term uptrend for gold remains intact and we remain bullish. Gold could climb to about $2,000 an ounce in 2012. Safe haven bids could slowly return as prices stabilise," said Ong Yi Ling, an analyst at Phillip Futures in Singapore

"A sustained breach of $1,700 is needed for gold to resume its upward ascent. After the sell-off in gold earlier, this has reduced some of the speculative positions."

U.S. gold futures added $18 to $1,675.7 an ounce.

Euro zone finance ministers are reviewing the size of the private sector's involvement in a second international bailout package for Greece, which could undermine the aid programme and hasten the threat of a Greek default.

The euro fell to as low as $1.3163 early on Tuesday before stepping back to around $1.3207, up slightly on short-covering from $1.3170 in late U.S. trade.

The physical market paused for breath after a buzz of activity in the past week. Premiums for gold bars were steady at $2 an ounce to spot London prices in Singapore, the highest since February, after a recent correction ignited a rush in buying from jewellers and speculators.

Gold plunged to a two-month low around $1,534 an ounce in late September.

"I can finally take a breath after a few weeks of hectic trading. We saw some selling from Thailand and the Middle East but the market is otherwise quiet," said a physical dealer in Singapore.

In other precious metals, silver and palladium firmed, while platinum tracked equities lower despite encouraging auto sales in the United States.

Platinum and palladium are used in auto catalysts.

U.S. auto sales rose almost 10 percent in September, allaying concerns of a double-dip recession as major automakers forecast stronger sales through the remainder of the year.

Still battling to rebound from the effects of the March earthquake in Japan, Toyota Motor Corp and Honda Motor Co posted sales declines of almost 18 percent and 8 percent.

Precious metals prices 0636 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1673.19 16.79 +1.01 17.88 Spot Silver 31.09 0.75 +2.47 0.75 Spot Platinum 1495.00 -2.40 -0.16 -15.42 Spot Palladium 585.97 5.92 +1.02 -26.71 TOCOM Gold 4135.00 79.00 +1.95 10.89 64736 TOCOM Platinum 3727.00 -48.00 -1.27 -20.63 19363 TOCOM Silver 76.00 1.20 +1.60 -6.17 648 TOCOM Palladium 1455.00 -55.00 -3.64 -30.62 670 COMEX GOLD DEC1 1676.20 18.50 +1.12 17.93 19391 COMEX SILVER DEC1 31.17 0.37 +1.20 0.73 4450 Euro/Dollar 1.3218 Dollar/Yen 76.68 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months

(Reporting by Lewa Pardomuan; Editing by Sugita Katyal)

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