(Recasts, updates prices, market activity)
* Bullion breaks ranks with euro, fund buying helps
* Gold breaks above 200-day moving average at $1,635/oz
* Price rises as imports to China flag strong demand
* Silver's reverse H&S pattern indicates higher prices
* Coming up: U.S. weekly initial jobless claims Thursday
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, Jan 11 Gold rose to a
one-month high on Wednesday, breaking ranks with the
euro and equities, as evidence of strong physical demand from
China fueled fund buying after bullion's recent sell-off.
The metal rose for a second day as the single currency hit a
16-month low against the dollar after ratings agency Fitch
warned of dire consequences if the European Central Bank
refrains from taking more action on Europe's debt crisis.
Bullion has gained around 5 percent in 2012, appearing to
halt a strong, positive link with riskier assets. In the
previous two months, gold had tended to fall when the dollar
strengthened, trading in virtual lockstep with the euro.
However, some analysts said gold's gains could be
short-lived because the metal has failed to garner safe-haven
buying even as markets fretted over the viability of the euro.
"The strength of the dollar has not been friendly to
commodities markets in the past couple of years. As long as the
dollar is in an uptrend, I wouldn't be too positive on gold at
this point," said Mark Arbeter, chief technical strategist at
S&P Capital IQ.
Spot gold was up 0.3 percent at $1,637.51 an ounce by
2:36 p.m. EST (1936 GMT). U.S. February gold futures
settled up $8.10 at $1,639.60 an ounce, with volume in line with
its 30-day average.
Gold's gain brought prices above their 200-day moving
average around $1,635 an ounce. The metal had held the 200 DMA
for around three years until late December.
The metal drew support from macro hedge fund buying, said
James Steel, chief commodities analyst at HSBC.
Gold's rally to a one-month high of $1,646.90 on
Wednesday has given investors more confidence to buy the metal,
especially in light of improved demand in India given the
rupee's rise against the dollar, and a sharp increase in Chinese
Data showing record gold imports to China late last year has
reassured investors that physical offtake is underpinning the
market. China, the number-two buyer of the metal, is preparing
for the Lunar New Year this month, a key gold-buying period.
FLURRY OF TRADE
The volume of gold futures traded has risen as the metal
rallied, suggesting an improved outlook for bullion, analysts
According to data from CME Group, which offers the benchmark
gold futures contract <0#GC:>, volume on Tuesday reached its
highest in a month.
Silver was down 0.3 percent on the day at $29.85 an
ounce, after it rose more than 3 percent in the last session.
CitiFX said in a note that silver's bullish reverse
head-and-shoulders pattern suggested the metal could rally to
$33.30 after it held support at its September 2011 low around
Platinum rose for a third straight day, gaining 1.6
percent to $1,484.75 an ounce. The metal has been helped this
week by reports of a high risk of power outages in South Africa,
the world's largest producer of platinum.
Palladium added 1 percent at $639.75 an ounce.
2:36 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold FEB 1639.60 8.10 0.5 1630.80 1648.00 125,781
US Silver MAR 29.89 0.075 0.3 29.545 30.235 35,259
US Plat APR 1497.70 33.10 2.3 1463.50 1501.50 8,835
US Pall MAR 645.65 10.45 1.6 632.00 649.00 2,238
Gold 1637.51 5.02 0.3 1631.30 1646.90
Silver 29.850 -0.080 -0.3 29.600 30.240
Platinum 1484.75 23.25 1.6 1465.50 1496.00
Palladium 639.75 6.25 1.0 633.50 646.00
TOTAL MARKET VOLUME 30-D ATM
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 146,298 145,495 191,064 22.95 0.91
US Silver 36,854 36,939 77,253 37.76 -0.97
US Platinum 8,998 10,034 7,942 31 -3.00
US Palladium 2,305 3,671 4,459
(Additional reporting by Jan Harvey in London and Rujun Shen in
Singapore; Editing by Dale Hudson)