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PRECIOUS-Gold gives up early gains despite weaker dollar

Published 06/13/2011, 02:31 AM
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* Bullion off intraday high, support around $1,500

* Newmont sees gold above $1600 in 2012 on Asia demand

* Coming Up: Italy Industrial output Apr 2011, 0800 GMT (Updates prices)

By Lewa Pardomuan

SINGAPORE, June 13 (Reuters) - Gold gave up early gains on Monday despite a rebound in the euro against the U.S. dollar, lacking impetus to surpass recent peaks and sustain an uptrend fuelled largely by a debt crisis in Europe.

The physical market was deserted as jewellers were unsure about direction after bullion fell almost 1 percent on Friday for its biggest one-day decline in a month, squeezed by a rally in the dollar and declines in other commodities.

Spot gold fell $1.13 to $1,529.90 an ounce by 0620 GMT after rising as high as $1,532.56 an ounce, still well below a lifetime high around $1,575 struck in May.

Newmont Mining Corp , the world's No.2 gold producer, sees prices for the precious metal rising to $1,600 this year and above that next year, on growing demand from Asia's burgeoning middle class. [ID:nJKB004560

"I think it is still looking for sufficient momentum and a catalyst that's needed for it to break the $1,550 level on a sustained basis," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.

"I am still looking for gold to be supported above the $1,500 level. I think we are still seeing safe-haven flows and the Greece debt crisis. These are still factors that will continue to underpin gold."

Support for gold was seen at its 20-day moving average of $1,524, a level it has held for the past three weeks.

The euro edged up against the dollar on Monday on short covering following its slide on European haggling over a second Greek bailout and reduced expectations for euro zone rate hikes.

Investors will also wait for a batch of U.S. data such as manufacturing activity reports this week for clues on whether the surprisingly weak U.S. employment data for May was an aberration or the start of a trend.

"If we see the dollar continue to strengthen, then it could cause some pressure on commodities as well as for gold," said Ong at Phillip Futures.

"This week, I think we'll also be seeing some data like the retail sales figures that will be pretty important for financial markets."

The euro regained strength after falling by nearly 2 percent last week, its worst weekly performance since mid-May, but the gains could be short-lived, as disputes among policymakers cast a shadow over a meeting next week where euro zone leaders will finalise a new rescue package for Greece.

"People hope the market will test the lower levels, that's why it's pretty quiet," said a physical dealer in Singapore.

"You don't see people rushing to get physical gold. I am still offering gold bars at premiums of 60 to 80 cents," he added.

The bullion market in top consumer India was also slow as the monsoon progresses. The monsoon period is a seasonally slack one for gold demand and jewellers are expected to replenish stocks ahead of September, when festivals and weddings restart.

U.S. gold edged up $2.3 to $1,530.90 an ounce.

In other markets, the Nikkei lost ground after a surprise fall in Japanese machinery orders, while oil fell as growing investor concern about a slowdown in the United States and other industrialised economies combined with rising oil output from top exporter Saudi Arabia.

Precious metals prices 0620 GMT

Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 1529.90 -1.13 -0.07 7.78 Spot Silver 35.84 -0.29 -0.80 16.14 Spot Platinum 1824.99 1.24 +0.07 3.25 Spot Palladium 808.22 -1.73 -0.21 1.09 TOCOM Gold 3965.00 -15.00 -0.38 6.33 43923 TOCOM Platinum 4761.00 -14.00 -0.29 1.38 5714 TOCOM Silver 92.90 -3.40 -3.53 14.69 1198 TOCOM Palladium 2093.00 -2.00 -0.10 -0.19 449 Euro/Dollar 1.4340 Dollar/Yen 80.39 TOCOM prices in yen per gram. Spot prices in $ per ounce.

(Reporting by Lewa Pardomuan; Editing by Clarence Fernandez)

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