Gold edges up on euro zone fears, dollar limits gains

Tue Jul 24, 2012 4:03pm EDT
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By Frank Tang

NEW YORK (Reuters) - Gold edged up on Tuesday, outperforming equities for the second day in a row as worried investors bought the precious metal as a safe haven after European Union officials predicted Greece will need more debt restructuring.

Gold prices seesawed early, then reversed losses as EU officials said Greece probably will not be able to pay its debts, making further restructuring necessary.

Bullion's gains were limited, and gold futures slightly lower as the euro fell against the U.S. dollar. Europe's private sector looked set for a prolonged slump after surveys showed the downturn that began in the euro zone's small economies was now entrenched in Germany and France.

"Gold is mostly taking its cues from the euro-dollar. Volume is pretty decent, suggesting there are good underlying bids here," said Jonathan Jossen, an independent COMEX gold options floor trader.

Dealers said the euro-dollar move has taken the lead role in dictating day-to-day moves in gold, as impetus from central-bank monetary policy announcements and the physical markets petered out.

Spot gold was up 0.1 percent at $1,577.86 an ounce by 3:04 p.m. EDT (1904 GMT), moving in a relatively quiet range of less than $20.

U.S. COMEX August gold futures for August delivery settled down $1.20 at $1,576.20, with trading volume about 15 percent above its 30-day average, preliminary Reuters data showed.

A 1 percent drop in the S&P .SPX and tumbling grain prices after the previous session's record rally also capped further gains in gold. U.S. Treasuries bond yields fell to a new low on safety buying. .N <GRA/> <US/>   Continued...

Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in this picture taken in New York, September 15, 2011. REUTERS/Mike Segar