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Gold rebounds after 1 pct drop, equity gains may weigh

SINGAPORE, June 11 (Reuters) - Gold rebounded on short

covering on Friday after falling around 1 percent in the

previous session, while a rise in ETF holdings to another

record showed bullion still attracted buying from investors.

But gold was still at the mercy of movements in equity and

currency markets, with rallies in shares likely to curb gains.

Gold hit a lifetime high $1,251.20 earlier this week on fears

the euro zone's sovereign debt crisis may spread.

Spot gold XAU= was at $1,219.50 an ounce by 0216 GMT, up

$3.70 from New York's notional close on Thursday, when it

slipped after a rally in Wall Street curbed safe-haven demand.

"I don't really see gold depreciating very soon to a great

extend," said Darren Heathcote, head of trading at Investec

Australia in Sydney.

"But I do think it wouldn't surprise me to see it ease back

a little more if we see another couple of days of positive news

in the stock market," he added.

U.S. gold futures for August delivery GCQ0 hardly changed

at $1,221.7 an ounce after a drop on Thursday as gains in the

euro eased fears about euro zone credit contagion.

The world's largest gold-backed exchange-traded fund, SPDR

Gold Trust (GLD.P), said its holdings rose to a lifetime high

at 1,306.137 tonnes as of June 10. [GOL/SPDR]

Japan's benchmark Nikkei average .N225 rose 2.01 percent

to 9,734.33 on Friday after U.S. stocks posted their best day

in the last nine on Thursday in response to signs of health in

the euro debt market. [.T] [.N]

"It's too difficult to say with any certainty that the

market will go one way or the other, but certainly I would like

to think that we are going to get a period of stability and

probably see gold ease back a little bit," said Heathcote.

"If it did, we'll probably be targeting somewhere down around

the $1,175 area," said Heathcote, referring to a low seen in


The euro's short-covering rally paused above $1.2100 on

Friday, with the single currency squaring up to test

significant bands of resistance, and the Australian dollar held

strong gains as firmer share markets improved risk tolerance.


Investors also breathed a sigh of relief after European

Central Bank President Jean-Claude Trichet said three-month

emergency loans to banks would continue until September and

when Germany's high court rejected efforts to block German

guarantees for euro zone financial aid.

"There's a bit of bargain hunting but I think if we see

more rebound in stocks, then gold will drift down," said a

dealer in Hong Kong.

"I don't think there's buying from jewellers. People are

also waiting for more clues, whether the euro will continue to


U.S. crude futures stood steady on Friday after closing at

a four-week high above $75 a barrel a day earlier on the back

of a Wall Street rally and a rosier oil demand forecast by

International Energy Agency. [O/R]

Precious metals prices at 0216 GMT

Metal Last Change Pct chg YTD pct chg


Spot Gold 1219.50 3.70 +0.30 11.30

Spot Silver 18.29 0.10 +0.55 8.67

Spot Platinum 1544.50 10.50 +0.68 5.28

Spot Palladium 454.75 4.25 +0.94 12.15

TOCOM Gold 3600.00 -3.00 -0.08 10.46


TOCOM Platinum 4587.00 82.00 +1.82 4.70


TOCOM Silver 54.30 0.60 +1.12 5.03


TOCOM Palladium 1350.00 23.00 +1.73 15.88


Euro/Dollar 1.2102

Dollar/Yen 91.57

TOCOM prices in yen per gram. Spot prices in $ per ounce.

(Editing by Himani Sarkar)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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