LQwD FinTech Corp (LQWDF)

[the cork]

Gold climbs towards $1,070 as dollar slips
Jan Harvey
LONDON
Tue Feb 9, 2010 7:29am EST


LONDON (Reuters) - Gold prices rose in Europe on Tuesday as the dollar weakened versus the euro amid speculation a rescue plan for struggling Greece may be arranged soon, enhancing the precious metal's appeal as an alternative asset.

Spot gold was bid at $1,068.20 an ounce at 1207 GMT (7:07 a.m. EST), against $1,062.80 late in New York on Monday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $1.80 to $1,067.50 an ounce.

Afshin Nabavi, head of trading at MKS Finance in Geneva, said the euro's recovery was an excuse for buyers to get back into the market.

"After Friday's free-fall, markets have been consolidating yesterday and so far today within a range of $1,050-$1,075," he said. "Physical demand is still high out of Far East and India, so (there is) good support in the market."

The euro extended gains versus the dollar on Tuesday as investors covered short positions on market speculation that some form of bailout will soon be organized for Greece.

News that European Central Bank President Jean-Claude Trichet was leaving a meeting of central bankers in Sydney early to attend a European Council meeting on February 11 prompted speculation a plan was being discussed.

The euro's slide last week amid fears over the indebtedness of some peripheral euro zone economies such as Greece, Portugal and Spain sent gold prices to a three-month low of $1,043.75.

If these issues are successfully addressed, it is likely to provide a fillip to the euro, and consequently to gold.

"The issue of sovereign risk, which is currently working in the dollar's favor and against the euro and therefore gold, could come back to haunt the dollar," HSBC said in a note.

"If the European Union member nations begin to address their fiscal problems and the U.S. fails to make progress on similar fiscal issues before the November elections, the dollar may find itself on the defensive later in the year. This could help boost gold," it said.

ETF HOLDINGS STEADY

China Investment Corp CIC.UL, the Asian giant's $300 billion sovereign wealth fund, said it had invested $155.6 million in the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust.

The trust's holdings were unchanged on Monday after reporting their first inflow of 2010 after spot prices fell sharply on Friday.

Gold ETFs issue securities backed by physical stocks of bullion, giving the investor exposure to the underlying gold price without taking delivery of the commodity itself.

Among other precious metals, silver was at $15.16 an ounce against $14.98, tracking gold higher. Platinum was at $1,484 an ounce against $1,472, while palladium was at $409.50 against $404.

"Both metals have tracked gold and the dollar overnight and will be looking to the currencies and broad risk sentiment for direction," said James Moore, an analyst at TheBullionDesk.com.

The world's number one carmaker Toyota Motor Corp (7203.T) said it is recalling nearly half a million of its flagship Prius and other hybrid cars for braking problems.

BMW (BMWG.DE), the world's biggest premium automaker, said on Tuesday its group vehicle sales rose 16.6 percent in January to 82,120 units, and reiterated its target to boost 2010 unit sales at a single-digit rate.

Platinum and palladium are highly exposed to the automotive sector, as more than half of demand for the metals each year comes from carmakers.

http://www.reuters.com/article/ousivMolt/idUSTRE5B10OV20100209