PRECIOUS-Gold steadies as Hungary raises fresh euro zone concern

* Gold steadies after early down turn

* Low inflation signs give way to Hungary debt concern

* Technical outlook points to looming price drop
(Recasts, adds details, quote, updates prices)

SYDNEY, July 19 (BestGrowthStock) – Gold steadied in Asia on Monday
after early selling on low inflation signals gave way to fresh
concerns over Hungary’s ability to pay its debts prompted safe
haven buying.

But longer term, the firmness in bullion is not supported
by technical analysis, which suggests gold is ready to ease
further to lows last seen in late May of $1,175 per ounce.

For a technical view on gold, see: [ID:nSGE66I00Z]


For a graphic on 24-hour gold technical outlook, click:
Spot gold (XAU=: ) at 0330 GMT was almost flat at $1,193.05 an
ounce versus Friday’s nominal close after prices ended last
week almost 2 percent lower.

Gold has found some crisis-based support on news that the
IMF and European Union suspended a review of Hungary’s funding
programme at the weekend, which has ignited fresh eurozone
jitters, according to bullion dealers.

This means the country will not have access to remaining
funds in its $25.1 billion loan package set up in 2008 until
the review is concluded. [ID:nLDE66G0AP]

Trading volumes were reduced by a market holiday in Japan.

Countering sentiment over Hungary’s financial outlook are
signs of the United States economy heading into deflation based
on cautionary Federal Reserve minutes released last week.

“If it becomes clear that deflation is a strong
possibility, that will be negative for gold,” a metals dealer
in Sydney said.

Federal Reserve Chairman Ben Bernanke testimony before the
Senate Banking Committee on Wednesday will be closely watched
for reaction in currency and bullion markets, according to

If Bernanke suggests that the Fed will resume quantitive
easing measures the greenback is likely come under more
pressure, possibly offering bullion a lift to gold, they said.

But a balanced outlook suggesting the current weakness is
likely to be temporary should provide some support for dollar
and likewise is seen weighing down bullion prices.

Gold usually moves inversely to the dollar and in line with
the euro. When the dollar rises it makes gold for holders of
other currencies more expensive and reduces its demand.

The euro stepped back after touching a two-month high versus
a broadly weaker dollar on Friday as investors bet that gains
supported by rising European money market rates were overdone.

U.S. gold futures for August delivery (GCQ0: ) climbed 0.4
percent to $1,193.00 an ounce against Friday’s settlement price
of $1,188.20.

Later in the week, bullion markets are awaiting the results
of stress tests on European banks due out on Friday as an
indicator of wider risk levels in euro-zone economies.
Precious metals prices at 0324 GMT
Metal Last Change Pct chg YTD pct chg
Spot Gold 1192.85 -0.25 -0.02 8.87
Spot Silver 17.83 0.04 +0.22 5.94
Spot Platinum 1512.00 3.00 +0.20 3.07
Spot Palladium 451.00 4.22 +0.94 11.22
TOCOM Gold 3315.00 -81.00 -2.39 1.72
TOCOM Platinum 4223.00 -71.00 -1.65 -3.69
TOCOM Silver 50.00 -1.90 -3.66 -3.29
TOCOM Palladium 1279.00 -22.00 -1.69 9.79
Euro/Dollar 1.2910
Dollar/Yen 86.65
Spot prices in $ per ounce.
(Reporting by James Regan; Editing by Ed Lane)

PRECIOUS-Gold steadies as Hungary raises fresh euro zone concern