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PRECIOUS-Gold steady on weak U.S. data, Europe debt woes

Published 07/10/2011, 11:12 PM
Updated 07/10/2011, 11:16 PM
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* Safe-haven demand buoys gold sentiment

* Physical buying dries as prices rose $60 last week

* Coming up: U.S. June employment index; 1400 GMT (Adds details, comments; updates prices)

By Rujun Shen

SINGAPORE, July 11 (Reuters) - Spot gold was steady on Monday, as the dimmed outlook for the U.S. economy and persistent worries about euro zone nations' debt problem supported sentiment.

The weaker-than-expected payrolls data last Friday dampened hopes that the U.S. economy would bounce quickly from a slowdown in the first half of the year, and helped gold stage a 3.9-percent weekly rise, its best week since November 2009.

A spate of data from the United States, including trade, retail sales, industrial production and consumer price index, is expected this week.

"If we see something that confirms further the weakness of U.S. economy we may see gold benefit from that," said Darren Heathcote, head of trading at Investec Australia.

Spot gold was little changed at $1,544.10 an ounce by 0257 GMT. It rose to a two-week high of $1,544.46 earlier in the day.

U.S. gold edged up 0.2 percent at $36.62.

Ongoing worries about euro zone nations' sovereign debt and uncertainties around the debt ceiling talks at the U.S. Congress also helped buoy the safe-haven demand in bullion.

President Barack Obama and Republican leaders failed on Sunday to mend rifts over tax increases and social spending cuts in talks aimed at cutting the U.S. budget deficit and averting a debt default.

Meanwhile European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis for Monday morning, reflecting concern that the crisis could spread to Italy, the region's third largest economy.

"If we start to see more pressure on Italy, such as talk of debt default, gold will look to test the previous high," said Heathcote of Investec.

Gold rose to an all-time high of $1,575.79 on May 2.

On the physical market, buyers have moved to the sidelines after prices advanced nearly $60 in the previous week while scrap sales remained subdued.

"If prices move higher, we may some see scrap selling trickle in," said a Singapore-based dealer. "For now we are not seeing much activity."

Physical demand is low during summer months when India, the world's largest gold consumer, goes through the monsoon season during which farmers are busy sowing and gold sales slows. Rural areas account for about 70 percent of India's annual gold consumption.

Spot silver inched down 0.3 percent to $36.56 an ounce, off the one-month high of $36.82 reached last Friday. U.S. silver gained 0.2 percent to $36.62.

Precious metals prices 0257 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1544.10 0.55 +0.04 8.78 Spot Silver 36.56 -0.10 -0.27 18.47 Spot Platinum 1730.74 -2.01 -0.12 -2.08 Spot Palladium 771.22 -1.38 -0.18 -3.54 TOCOM Gold 4015.00 6.00 +0.15 7.67 39068 TOCOM Platinum 4541.00 -49.00 -1.07 -3.30 10817 TOCOM Silver 94.90 -0.20 -0.21 17.16 419 TOCOM Palladium 2012.00 -45.00 -2.19 -4.05 188 COMEX GOLD AUG1 1544.70 3.10 +0.20 8.67 4809 COMEX SILVER SEP1 36.62 0.08 +0.21 18.36 1384 Euro/Dollar 1.4206 Dollar/Yen 80.72 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months (Editing by Himani Sarkar)

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