Gold flatlines, fragile euro weighs

Gold traded nearly flat on Wednesday after a successful Spanish debt auction eased fears about the eurozone debt crisis, but the upside is capped as the euro remains under pressure ahead of a longer-term debt sale in Madrid later this week.

Investors brushed off the soft US industrial output and lower-than-expected housing starts data as relief over Spain's finances and a surprise jump in German business sentiment lifted equities and other riskier assets.

"The nervousness around the eurozone has eased a bit, which could help stabilise the euro and support gold prices," said Shanghai CIFCO Futures analyst Li Ning.

But Li added that market sentiment remained cautious ahead of a policy meeting by the US Federal Reserve next week, after comments from the Fed over recent weeks have caused sharp price fluctuations.

Adding to the cautious tone, although Spain managed to exceed the target at Tuesday's debt auction, it was forced to pay a stiff premium compared with a month earlier, reflecting lingering concern about the country's finances and boding ill for a key long-term debt sale on Thursday.

Spot gold was little changed at USD 1,649.89 per ounce by 0250 GMT, after touching a one-week low near USD 1,634 in the previous session.

US gold traded nearly flat at USD 1,651.

Buying interest in Asia's physical market was muted, even as a key gold-buying festival in India looms on the horizon.

"People won't want to commit too much at this point," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong. "There is some buying when prices fall to the USD 1,630-USD 1,640 level, but the volume shrinks when prices rebound to USD 1,660-USD 1,670."

Leung said gold bar premiums in Hong Kong were stable at USD 1.10-USD 1.60 per ounce above London prices.

Spot platinum gained half a percent to USD 1,585.44 per ounce after falling to USD 1,556.50 earlier this week -- the lowest in more than two months.

India, the world's biggest gold consumer, may see platinum imports rise by almost 50% this year to 20-22 tonne.

Spot palladium rose to a two-week high of USD 662.50 per ounce before paring some gains to USD 660.95, up half a percent from the previous close.

Precious metals prices 0250 GMT

Metal Last Change Pct chg YTD pct chg Volume

Spot Gold 1649.89 0.91 +0.06 5.51

Spot Silver 31.70 0.03 +0.09 14.48

Spot Platinum 1585.44 8.31 +0.53 13.81

Spot Palladium 660.95 3.55 +0.54 1.30

COMEX GOLD JUN2 1651.00 -0.10 -0.01 5.37 3641

COMEX SILVER MAY2 31.69 0.02 +0.05 13.52 1710

Euro/Dollar 1.3109

Dollar/Yen 81.39

COMEX gold and silver contracts show the most active months