(Reuters) - Gold steadied on Wednesday, following four straight days of rallies, as the intensifying  euro zone  debt crisis threatened to undermine the euro and offset any potential safe-haven demand for the metal.

The euro rose on Wednesday, but has come under pressure in the last week as the debt crisis has reignited, this time by concern about Spain, where the head of the central bank said on Tuesday commercial banks will need more capital if the economy continues to deteriorate.

Benchmark 10-year Spanish yields touched 6 percent for the first time since early December on Wednesday, having risen by more than two-thirds of a percentage point in the last week alone, while peripheral banking stocks have been pummelled.

Spot gold was last down 0.1 percent on the day at $1,658.01 an ounce by 1102 GMT, while U.S. June  futures  were down 0.3 percent at $1,655.60 an ounce.

Gold in euros was last down 0.5 percent at 1,261.62 euros an ounce, having touched two-week highs the previous day above 1,271.00 euros.

" We think gold will be in a range of $1,600 to around $1,690 or $1,700, which is a fairly wide range. But I think it will be difficult for gold to break out of that range," Standard Bank analyst Walter de Wet said.

" What we are seeing is growing interest to buy in the physical market below $1,630. Should we drop below $1,600, the demand will be pretty strong," he said.

The correlation between gold and the euro/dollar exchange rate strengthed on Wednesday to reach its most psitive since early January, above 65 percent, meaning the gold price is more likely to move in tandem with the single European currency than it was just six weeks ago.

Pressure on the euro from concerns about the debt crisis could translate into pressure on the gold price from euro-based investors that will seek higher dollar returns from their bullion positions.

" If there are credit concerns, we think gold will benefit but it might not be in dollars. If there are problems in Europe, we will see the euro weaken against the dollar ... What it would do in this environment where we've seen macro selling in gold over the last couple of weeks, is at least for now, it won't push gold higher, but at least it will make people think twice about liquidating long positions," de Wet said.

Adding to the chances of a safe-haven rally in gold was a powerful earthquake off the coast ofIndonesia, that prompted tsunami warnings for the entire Indian ocean.

Gold, the dollar and U.S. government debt had benefited from the latest bout of safe-haven interest from investors, with gold rallying more than 1 percent and U.S. Treasuries yields hitting 4-week lows in the previous session. USD/

The prospect of more monetary easing, which strengthens the outlook for higher inflation, also supported the sentiment in gold, regarded as a hedge against rising prices.

" If weak data continues, the Fed will have to intervene again to stimulate consumption," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

" The next couple of years will be really challenging for global growth and central banks will be relied on as a crutch to get us through."

Italian one-year borrowing costs rose for the first time since November at a sale of short-dated paper on Wednesday, reflecting fresh doubts in the market about the more indebted euro zone nations and nerves ahead of a larger three-year sale on Thursday.

Hong Kong's gold exports to  China  rose 20 percent in February on the month as appetite for the precious metal remains strong in China, which is expected to overtake India as the world's top gold consumer this year.

Some suspected the number could include purchases from the public sector, as the market was largely quiet during a post-Lunar New Year holiday slump in February.

" On the public level, China's central bank will continue to accumulate gold, which is easier than liberalising their capital account and currency," said Friesen of SocGen, adding that building gold reserves would help China's push to turn the renminbi into a global currency.

Accommodative monetary policy will remain an incentive for private investors to buy into gold, he added.

Silver fell 0.5 percent to $31.61 an ounce, pushing the number of ounces of the metal needed to buy one ounce of gold up to 52.5 from 50 just one week ago, reflecting gold's relative outperformance.

 

* Light selling seen in physical market  India buys little
* Spot gold technical signals mixed
* Coming up: U.S. ICSC chain stores, weekly  0745 GMT

	
    By Rujun Shen	

    SINGAPORE, April 10 (Reuters) - Gold rose to a one-week high
above $1,650 an ounce on Tuesday, on course for its fourth
straight session of gains, as hopes for more monetary easing by
the Federal Reserve boosted sentiment.	

    It was the first trading day for a number of markets after
the Easter holiday, during which disappointing U.S. jobs data
breathed new life into hopes for more money-printing from the
central bank, which would benefit gold as an inflation hedge.
  	
    " The sentiment after the U.S. payrolls data may push gold
and silver prices higher this week, but technically those two
are still on a downtrend,"  said a Shanghai-based trader.	

    Spot gold fell more than 2 percent last week, extending a
two-month losing streak as worries abut the euro zone debt
crisis eased and a generally improving global economic recovery
encouraged investors to look into higher-yielding assets, such
as equities.	

    Bullion prices are up 5 percent so far this year, but
lagging behind platinum's 16-percent rise and silver's
15-percent climb.	

    Spot gold rose 0.8 percent to a one-week high of
$1,654.1 an ounce, before easing to $1,647.59 an ounce by 0738
GMT. It dropped to a near three-month low just above $1,610 last
week. U.S. gold gained 0.3 percent to $1,649.	

    Technical signals for spot gold were mixed as the metal
hovered around the resistance at $1,648 level, said Reuters
market analyst Wang Tao. 	
    	
    In the physical market, buying was sluggish while light
selling was spotted as market participants took advantage of
recent price gains, dealers said.	

    " People don't have much confidence that prices would rally
rapidly in the near term and are selling to lock some profit," 
said a Singapore-based dealer.	

    Investors will keep a close eye on more data and speeches
from various Fed officials this week to look for cues on the
health of the economy and the U.S. central bank's attitude to
monetary easing.	

    " We still prefer gold despite an extended period of profit
taking in 4Q11 and renewed volatility in 1Q12,"  said Goldman
Sachs in a research note.	

    " Negative real interest rates, the prospect of further
unconventional monetary policy in the US and Europe to confront
uncertainties on the growth outlook, and heightened political
tensions in the Middle East are all expected to underpin strong
investment demand." 

* U.S. jobs data supports monetary easing expectations

*  China  March consumer inflation unexpectedly spikes

* India jewellers call off strike (Updates prices)

By Jan Harvey

LONDON, April 9 (Reuters) - Gold prices rose more than 1 percent on Monday, recovering from last week's hefty drop after disappointing U.S. jobs data revived hopes for fresh monetary easing and a spike in Chinese inflation boosted appetite for the metal.

Market watchers said a report on Friday showing that U.S. employers had hired far fewer workers in March than in previous months could keep the door open for the Federal Reserve to provide more monetary support for a still sluggish economy.

" Our economists note the report had an undeniably weak tone and will raise doubts about the strength of the labour market," said Barclays Capital in a note on Monday.

" While (they) do not believe that this report alone will propel renewed policy action in April, the door to further quantitative easing remains ajar and may shift the decision point to the June FOMC (meeting) as the Fed continues to monitor the incoming data."

Ultra-loose U.S. monetary policy keeps real interest rates, and consequently the opportunity costs of holding non-yielding bullion, at rock bottom and was a major factor in driving gold prices to record highs last year.

Spot gold was up 1 percent at $1,646.19 an ounce at 1312 GMT, while U.S. gold  futures  for April delivery were up $18.00 an ounce at $1,648.10. Trading was thin, with most European financial markets closed for the Easter holidays.

A higher-than-expected reading on China's annual inflation in March supported sentiment in gold. Analysts also dismissed the possibility that the data would dissuade Beijing from its pro-growth monetary policy.

" If we see more RRR (reserve requirement ratio) cuts, it will be positive for gold as it will raise inflation outlook down the road," said Li Ning, an analyst at Shanghai CIFCO Futures.

China's physical gold demand jumped 20 percent last year, compared with a 7 percent overall rise in global demand, according to the World Gold Council. Analysts have predicted China will take over from India as the world's top gold consumer this year.

BEWARE OF DOLLAR

Despite the sluggish payrolls data, analysts said a generally improving U.S. economy and a dragging  euro zone  debt crisis could lead to further dollar strength, which in the short term might weigh on commodities priced in the greenback, including gold.

The dollar index held steady on Monday after sliding on the U.S. jobs data in the previous session. But the dollar still managed to post a 1.3 percent gain last week.

" The pattern we've seen over the past few months, namely a strong U.S. and a weaker Europe, is likely to continue to keep the dollar supported," said Li of Shanghai CIFCO.

Data from the U.S. Commodity Futures Trading Commission echoed the sentiment. Speculators cut their bullish bets on gold futures and options in the week ended April 3.

In the physical market, jewellers in India called off their three-week-old strike on Saturday, an industry official said, on assurances from Finance Minister Pranab Mukherjee that the government would consider scrapping a budget proposal to levy excise duty on unbranded jewellery.

Gold traders in India booked some deals after the strike, seeking to replenish stocks for a gold-buying festival slated later in the month.

The sharp drops in prices in the past week attracted some physical buying interest from China, traders said.

" Premiums in China were much higher, and that attracted quite a bit of buying," said a Shanghai-based trader.

Buying has slowed as prices have pulled back from a near three-month low of $1,611.80 an ounce hit last week, traders said.

Among other precious metals, silver was down 0.1 percent at $31.69 an ounce, spot platinum was up 1.3 percent at $1,612 an ounce and spot palladium was up 1 percent at $644.72 an ounce. (Additional reporting by Rujun Shen editing by Jane Baird)