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PRECIOUS METALS: Comex Gold Gains On China's Euro Support
--Comex April gold up $20.60, or 1.2%, at $1,738.30 a troy ounce

--China support for euro-zone seen easing credit squeeze risk, lifting gold

--Paulson & Co. cuts gold ETF holdings during fourth quarter; Soros increased stake


By Matt Day
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Gold futures rebounded on Wednesday after three consecutive sessions of losses, taking cues from upbeat sentiment in other markets after better than expected European economic data and signs that China may increase its support for the euro zone.

The most actively traded contract, for April delivery, was recently up $20.60, or 1.2%, at $1,738.30 a troy ounce on the Comex division of the New York Mercantile Exchange.

Precious metals gained on Wednesday after the governor of the People's Bank of China said the central bank would increase its holdings of euro-denominated assets. China's president also said Wednesday that the country would participate in international action to support Europe.

The statements were seen as signs of support for the euro zone, which is in the middle of a two-year struggle to keep its more debt-heavy countries from defaulting.

"Most of this optimism (in the gold market) was inspired by the commitment from Chinese authorities to help resolve the region's debt crisis," said Marc Ground, an analyst with Standard Bank, in a note.

A set of better-than-expected readings on growth in the euro zone also boosted sentiment.

The gold market has come under pressure in recent months when investors were concerned about the financial stability of the euro zone. Those fears sent investors piling into the U.S. dollar, dragging on dollar-denominated gold by making the futures appear more expensive for buyers using other currencies.

Europe's crisis has also made some market participants more comfortable holding cash, rather than precious metals, as a safeguard in case of a financial freeze. Gold slumped as worries about the currency union mounted heading toward the end of 2011, and some high-profile investors cut their exposure to products designed to track the precious metal.

Hedge fund manager John Paulson cut his holdings of the world's largest gold exchange-traded fund by 15% during the last three months of 2011, according to a regulatory filing released Tuesday.

Paulson & Co., Paulson's investment vehicle, reported holdings of 17.3 million shares of the SPDR Gold Trust (GLD) as of Dec. 31, down from 20.2 million three months earlier.

George Soros's Soros Fund Management LLC nearly doubled its much smaller stake in the fund during the period, reporting 85,450 shares at the end of the year, up from 48,350 as of Sept. 30.

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