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Gold 1644.00, Silver 30.99 Rises On EU Calm; Central Banks Buy In March
Apr 24, 2012 By Matt Day Of DOW JONES NEWSWIRES

--Comex June gold recently rose $11.80, or 0.7%, to $1,644.40 a troy ounce
--Steady outside markets, weaker dollar spur gold buying
--Central banks in Mexico, Russia, Turkey among gold buyers in March, IMF says
--Key gold ETF holdings slip; Indian demand continues to disappoint


NEW YORK (Dow Jones)--Gold futures gained on Tuesday, as a pause in the escalation of concerns about Europe's debt crisis drew buyers to the precious metal.

The most actively traded contract, for June delivery, rose $11.80, or 0.7%, to $1,644.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

European markets were calm on Tuesday after being rattled Monday by a series of warning signs on the euro-zone's political and financial stability. But relatively well received auctions of Dutch, Spanish and Italian debt helped steady investor sentiment on Tuesday, drawing buyers to growth-sensitive assets and weighing on the U.S. dollar.

Gold tends to benefit from dollar weakness, as it makes the precious metal appear cheaper for buyers using other currencies.

"This morning we've seen precious metals remaining relatively stable, with concerns over the euro-zone having eased somewhat," said Standard Bank analyst Marc Ground, in a note.

Other investors were cautious about placing large bets in the gold market ahead of Wednesday's policy statement expected from the U.S. Federal Reserve. Gold tends to benefit from the type of accommodative monetary policies deployed by the central bank to support growth, and hints that more on the horizon could spur a rally in the metal.

Diminished expectations for more Fed action anytime soon were key in pushing gold prices down from this year's highs just below $1,800 a troy ounce.

Mexico, Russia, Turkey, Kazakhstan and Ukraine reported a rise in their gold holdings in March, according to data released on Tuesday by the International Monetary Fund, as emerging-markets central banks continue to boost their holdings of the precious metal.

Mexico's central bank purchased 541,000 ounces during the month. Russia added 532,000 ounces in March, and Turkey bought 369,000 ounces. Kazakhstan's reserves rose by 138,000 ounces.

World central banks through much of the 1990s and 2000s were sellers of the precious metal, but that trend flipped in recent years as some central banks bought gold to keep the metal's share of their ballooning foreign exchange holdings steady. Others bought in an effort to diversify holdings of the world's major reserve currencies.

Central Asian nations in particular are likely to continue buying through 2012, said Steve Scacalossi, a vice president with TD Securities, in a note, "as they continue to diversify their reserve components" away from the U.S. dollar.

Other areas of physical demand have been less robust. The SPDR Gold Trust, the world's largest physically backed gold ETF, saw its holdings decline to 1,281.94 metric tons on Monday, from 1,286.17 tons Friday.

Physical demand in Asia, frequently a key support for gold prices, hasn't provided a firm floor under the market. Demand from India, the world's top importer, disappointed ahead of a key Hindu festival there that typically spurs increased gold buying.

--By Matt Day, Dow Jones Newswires; 212-416-4986; [e-mail]
--Rhiannon Hoyle contributed to this article.
(END) Dow Jones Newswires
04-24-12 1013ET

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