US MIDDAY: gold climbs in Europe

Gold rose back above $1,640 an ounce on Thursday, recovering from an earlier dip that took the metal to its weakest in 10 days, as the euro's bounce into positive territory encouraged some investors to buy back into the metal at lower prices. Lacklustre US data on new jobless claims, existing home sales and regional manufacturing also boosted arguments in favour of more accommodative monetary policy, a potentially positive development for gold.
Spot gold was up 0.3 percent at $1,646.30 an ounce at 1405 GMT, having earlier sunk as low as $1,630.80 an ounce, while US gold futures for June delivery were up $7.90 an ounce at $1,647.50. Appetite for assets seen as higher risk, like stocks and the euro, suffered after an auction of Spanish debt earlier. Spain sold all the bonds they wanted at the auction on Thursday, but rising yields worried investors.
But the single currency reversed losses after the US market open, as the dollar retreated. With the euro zone debt auctions out of the way, attention is turning across the Atlantic to a Federal Reserve meeting next week, at which policymakers will discuss US monetary policy.
"(The euro zone debt crisis) is just one variable in the gold equation," LGT Capital Management analyst Bayram Dincer said. "The other... is the Fed's upcoming meeting. That will be the next factor to determine the future direction for gold." Gold traders are awaiting fresh clues on whether a third round of quantitative easing, which would keep interest rates, and consequently the opportunity cost of holding bullion, at rock-bottom levels, is on the cards.
Minutes from the Fed's March meeting released this month showed support thinning for further bond purchases. Officials are unlikely to develop any more appetite for them by their meeting next week, despite disappointing March jobs figures. "Gold prices have been well supported since 2009 by the rapid expansion of central bank liquidity," Natixis said in a note on Thursday.
"Nevertheless, with the gradual recovery in the US economy beginning to call into question the need for additional quantitative easing from the Fed, gold prices have failed to improve upon their September 2011 peak." From a chart perspective, gold remains firmly in the $1,630-1,657 range it has held this week, lacking strong external drivers to break out.
Physical buying interest from the world's top two gold consumers, India and China, has been sluggish, even after a three-week strike by India's jewellers came to an end. A break above the top of its current range could precipitate a rise towards $1,680/$1,690, analysts said, while decent support is seen near its April lows at $1,611 an ounce. "We remain bearish gold so long as it trades below 1680, the last high," ScotiaMocatta said in a note late on Wednesday.
Silver was up 0.7 percent at $31.83 an ounce, while spot platinum was up 0.3 percent at $1,577.99 an ounce and palladium was 0.4 percent higher at $657.22 an ounce. The gold, platinum ratio, which measures the number of gold ounces needed to buy an ounce of platinum, edged down to 1.04 on Thursday from the one-month high it hit earlier this week, as platinum clawed back some lost ground against the yellow metal.
Platinum, which is heavily exposed to the European car market, has struggled to overcome soft demand in recent years. "We still favour gold," Standard Bank said in a monthly report. "We see $1,630 and $1,600 as good levels to establish a long position for a move higher. Physical demand for gold in Asia is strong below $1,650."
"From a cost-of-production perspective, platinum provides value between $1,600 and $1,550," it added. "The platinum market has tightened up after the recent strike at an Impala Platinum mine in South Africa. However, we believe that industrial demand will remain absent above $1,750 - and this should cap upside.