Gold edges higher as dollar softens

LONDON - Gold edged higher in Europe on Wednesday, recovering some of the previous day's 2 per cent dip, as the U.S. dollar softened a touch versus the euro, though the metal remained vulnerable to weakness in other commodities.

Gold had dropped along with most commodities on Tuesday after China's decision to raise its banks' reserve requirements sparked fears spending will be curtailed. The dollar initially benefited from the move, though it has since steadied.

Spot gold was bid at $1,132.65 (U.S.) an ounce at 0946 GMT, against $1,127.95 late in New York on Tuesday. U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange firmed $3.60 to $1,133.00 an ounce.

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Other commodities continued to be pressured by the China story, with industrial metals dropping in Europe and oil prices falling more than $1 a barrel.

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Among other precious metals,

Silver tracked gold higher to $18.33 an ounce from $18.24.

Platinum was at $1,561.50 an ounce against $1,568.50.

Palladium was at $414.50 against $421.50.

U.S. platinum and palladium exchange-traded funds launched last Friday were met with buying interest, with about 170,000 ounces of metals added in the first two trading sessions, a spokesman for ETF Securities, which operates the funds, said.

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Copper hit a two-week low on Wednesday, as investors worried that the signs of tighter monetary policy in China could stem demand from the world's top consumer of industrial metals.

But some analysts remained bullish, arguing that monetary tightening in China instead underscored the sheer strength of the country's growth.

Copper for three-months delivery on the London Metal Exchange traded at $7,364 (U.S.) a tonne at 1109 GMT from a close of $7,455 on Tuesday. The metal used extensively in power and construction earlier fell to $7,298 a tonne, its lowest since Dec. 30.

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Aluminum traded at $2,262 from $2,281. LME stocks of the metals used in transport and packaging fell 5,250 tonnes, standing at just under 4.6 million tonnes.

Zinc was at $2,437.25 from $2,476. Battery material lead was at $2,403.5 from $2,432, earlier hitting a two-week low of $2,370. Tin traded at $17,625 from $17,895.

Nickel was at $17,611 from $ 17,700. The metal used for galvanizing steel earlier fell to $17,325, its lowest in more than three weeks.

Market sentiment was also dented by data showing the German economy contracted by a record five per cent last year due to a slump in its key export sector.

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Copper,Nickel,Aluminum.Lead,Zinc

http://www.kitcometals.com/charts/

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Gold & PGM Prices

Jan 13 2010 7:12AM NY Time dd Change Gold 1133.60 +0.51% Platinum 1565.00 -0.25% Palladium 415.00 -1.66% Rhodium 2600.00 +0.00%