Gold recoups losses in European trade

Gold was set for a second daily rally on Wednesday, having erased earlier losses when US equities tumbled in opening trade following downbeat US economic data and as the Greek debt crisis escalated.
In Greece, tens of thousands of angry citizens massed in front of parliament in a sign of rising opposition to austerity and European officials said a new bailout deal for Athens could be delayed until next month.
Reflecting the investor discontent over the eurozone debt crisis, the euro fell nearly 1 percent against the dollar, pushing up the price of gold in euros by nearly 1.5 percent in its largest one-day rise since late May.
Spot gold in dollars was last up 0.5 percent on the day at $1,530.00 an ounce by 1400 GMT, having recovered from a session low of $1,513.86 earlier in the day.
"The theme of the European sovereign debt crisis just won't go away and on that basis, there is a limit to how much you want sell gold at this moment in time," said Saxo Bank senior manager Ole Hansen. Gold does tend to drift between June and August, when trading volumes thin out and investors become reluctant to take on big positions and coupled with a near-1 percent rise in the dollar, the bullion price would ordinarily come under pressure.
The traditionally inverse relationship between gold and the dollar weakened somewhat on Wednesday, but analysts said the macroeconomic events that affect the currency markets would remain the key driver for the bullion price.
"Euro zone - and perhaps soon US - sovereign debt concerns remain critical, there is a lot of liquidity still and China's growing middle class can't get enough of the yellow metal," said David Thurtell, analyst at Citi.
Raising concern this week was inflation data from China and India, two of the world's fastest growing economies, which showed accelerating price pressures.
"Chinese and Indian inflation is underpinning what has been resilient physical metal demand so far this year," said Daniel Major, analyst at RBS, "Currencies will be important."
Investor interest in gold should eventually show up in holdings of physically backed exchange-traded funds, of which the largest is New York's SPDR Gold Trust.
SPDR's holdings were unchanged on Tuesday from Monday, although global gold ETF holdings witnessed their first daily inflow since last Thursday.
Spot silver was bid at $35.50 an ounce from $35.32 late on Tuesday. The precious industrial metal hit a record high of $49.51 on April 28. Among the more industrial precious metals, platinum was last down 0.3 percent at $1,784.49 an ounce and palladium down 0.7 percent at $787.72 an ounce.