By Ian Campbell

LONDON (Reuters Breakingviews) – Gold, it seems, can have it both ways. Its latest charge to a three-month high is ascribed both to relief at a Greek bailout and to fear it won’t work. The bubbling precious metal has become simultaneously a speculative, risk-on play and a safe haven. That duality should keep the gold bull alive for a little while yet.

The golden beast is showing signs of fatigue. A three-month high leaves it 8 percent down on its September peak. Demand for gold rose in 2011 — but by just 0.4 percent on 2010. Ultra-high prices are weighing down jewellery consumption. India, traditionally the largest consumer of gold for jewellery, imported 44 percent less gold in the fourth quarter of 2011 than a year earlier as the rupee plunged. China overtook India as the biggest gold importer, but its demand was up a meagre 3 percent year-on-year.

Weakness in jewellery demand is in fact not new. It is down by a quarter over the past decade, from an annual average of 2,587 tonnes in 2002-04 to 1,931 tonnes in 2009-11. Extremely high prices are deterring consumers. Industrial demand has been stable, at about one tenth of the total. But it is demand for gold as an investment that has soared, rising from just 341 tonnes in 2003 to an annual average of 1,604 tonnes in 2010-11.

Sustained dollar weakness, zero interest rates and abundant money printing by the U.S. Federal Reserve have all boosted the appeal of gold and reduced the opportunity cost of holding it. The September price peak of $1,920 per ounce coincided with fears of a euro zone collapse and additional money-printing in the United States. When paper money cannot be trusted, gold seems priceless.

Normality is the gold bull’s enemy. Better American data, which has reduced the likelihood of more quantitative easing, and a firmer dollar are negative signals. Rising U.S. interest rates will eventually be the precious metal’s nemesis. But that day is still distant and euro zone crisis risks intensifying again, sending investors gold’s way. Gold’s bull run is tired but not quite over.

CONTEXT NEWS

VIENNA/TEHRAN (Reuters) – The U.N. nuclear watchdog’s latest mission to Iran failed to budge a defiant Tehran over its disputed nuclear program, sending oil prices to a nine-month high over fears of an increasing risk of confrontation with the West.

The United States criticized Iran on Wednesday over the collapse of the International Atomic Energy Agency’s talks in Tehran, saying it again showed the Islamic Republic’s refusal to abide by international obligations over its nuclear program.

Expressing defiance, Supreme Leader Ayatollah Ali Khamenei said Iran’s nuclear policies would not change despite mounting international pressure against what the West says are Tehran’s plans to obtain nuclear bombs.

“With God’s help, and without paying attention to propaganda, Iran’s nuclear course should continue firmly and seriously,” he said on state TV. “Pressures, sanctions and assassinations will bear no fruit. No obstacles can stop Iran’s nuclear work.”

A team from the Vienna-based IAEA had hoped to inspect a site at Parchin, southeast of Tehran, where the agency believes there is a facility to test explosives. But the IAEA said Iran “did not grant permission.”

The failure of the two-day IAEA visit could hamper any resumption of wider nuclear negotiations between Iran and six world powers – the United States, China, Russia, Britain, France and Germany – as the sense grows that Tehran feels it is being backed into a corner.

The standoff has rattled oil markets. On Wednesday, London-traded benchmark Brent crude for April delivery rose for a third day – up $1.24 a barrel at $122.90, a nine-month high. U.S. crude futures for April were up 3 cents at $106.28 a barrel.

VIENNA/TEHRAN (Reuters) – The U.N. nuclear watchdog ended its latest mission to Iran after talks on Tehran’s suspected secret atomic weapons research failed, a setback likely to increase the risk of confrontation with the West.

The United States criticized Iran on Wednesday over the failure of the International Atomic Energy Agency’s latest mission, saying it again showed Tehran’s refusal to abide by its international obligations over its nuclear programme.

Expressing defiance, Supreme Leader Ayatollah Ali Khamenei said Iran’s nuclear policies would not change despite mounting international pressure against what the West says are Iran’s plans to obtain nuclear bombs.

“With God’s help, and without paying attention to propaganda, Iran’s nuclear course should continue firmly and seriously,” he said on state television. “Pressures, sanctions and assassinations will bear no fruit. No obstacles can stop Iran’s nuclear work.”

A team from the Vienna-based IAEA had hoped to inspect a site at Parchin, southeast of Tehran, where the agency believes there is a facility to test explosives. But the IAEA said Iran “did not grant permission.”

The failure of the two-day visit by the IAEA could hamper any resumption of wider nuclear negotiations between Iran and six world powers – the United States, China, Russia, Britain, France and Germany – as the sense grows that Tehran feels it is being backed into a corner.

‘INTERNATIONAL OBLIGATIONS’

VIENNA (Reuters) – The U.N. nuclear watchdog said on Wednesday it had failed to secure an agreement with Iran during two days of talks over disputed atomic activities and that the Islamic Republic had rejected a request to visit a key military site.

In the second such trip in less than a month, a senior team from the International Atomic Energy Agency (IAEA) had travelled to Tehran to press Iranian officials to start addressing mounting concerns that the Islamic Republic may be seeking to develop nuclear weapons.

The outcome seems likely to add to already soaring tension between Iran and Western powers, which have ratcheted up sanctions on the major oil producer in recent months.

“During both the first and second round of discussions, the agency team requested access to the military site at Parchin. Iran did not grant permission for this visit to take place,” the Vienna-based IAEA said in a statement after the Feb 20-21 talks.

The IAEA named Parchin in a detailed report in November that lent independent weight to Western fears that Iran was working to develop an atomic bomb, an allegation Iranian officials reject.

“It is disappointing that Iran did not accept our request to visit Parchin. We engaged in a constructive spirit, but no agreement was reached,” said IAEA Director General Yukiya Amano.

Earlier, Iran’s envoy to the IAEA, Ali Asghar Soltanieh, told the country’s ISNA news agency that Tehran expected to hold more talks with the U.N. agency, whose task it is to prevent the spread of nuclear weapons in the world.

VIENNA (Reuters) – U.N. nuclear inspectors headed to Iran on Sunday for talks aimed at getting Tehran to start addressing their mounting concerns that it may be seeking to develop atomic bombs.

“We hope to have a couple of good and constructive days in Tehran,” Herman Nackaerts, deputy director general of the U.N. International Atomic Energy Agency (IAEA), said at Vienna airport as the five-member team prepared to depart.

“The highest priority remains of course the possible military dimensions of Iran’s nuclear program,” he told reporters, making clear he wanted to see concrete results in the discussions with Iranian officials.

Western diplomats have played down any hopes of a major breakthrough in the February 20-21 meeting, even though it comes just a few days after signs of a possible opening for diplomacy in the long-running nuclear dispute.

“I’m still pessimistic that Iran will demonstrate the substantive cooperation necessary,” one envoy said.

The outcome, after an inconclusive first round of discussions last month, could determine whether the international stand-off over Iran’s uranium enrichment program escalates further or offers scope to reduce tensions.

Iran denies Western allegations that it is seeking to develop nuclear weapons but its refusal to curb uranium enrichment work, which can have both military and civilian purposes, and stonewalling of the IAEA’s investigation have raised concerns.

VIENNA (Reuters) – The United Nations chief urged Iran Friday to implement Security Council resolutions under which Tehran should curb sensitive nuclear activity, but the Islamic state once again signaled it has no intention of doing so.

Secretary General Ban Ki-moon also said Iran must cooperate fully with the U.N. atomic watchdog, which will send a senior team to Tehran next week to seek explanations for a trove of intelligence suggesting Iran has tried to design atomic bombs.

Iran, which is facing tightening U.S. and European sanctions targeting its vital oil exports, rejects Western accusations that its nuclear program is ultimately designed to provide it with the means and technologies needed to assemble atom bombs.

“I have been urging … all senior authorities of the Iranian government that the onus is on the Iranian side to prove, to convince, the international community that their nuclear development program is genuinely for peaceful purposes,” Ban told a news conference in Vienna.

He said he was “deeply concerned” by a report by the International Atomic Energy Agency, a Vienna-based U.N. body, in November that detailed alleged research activities in Iran relevant for the development of nuclear weapons capability.

“The Iranian authorities must fully comply with relevant Security Council resolutions,” he said, referring to several such U.N. texts issued since 2006.

“All these issues should be resolved peacefully through negotiations, through dialogue … there is no alternative,” he added, making clear his opposition to any military action mooted as a last resort by Israel and the United States.

VIENNA (Reuters) – Iran, facing sanctions that could cripple its oil exports, has told world powers it wants to resume long-stalled talks with “new initiatives,” and France said it might be open to addressing suspicions about its nuclear program.

Tehran made the offer in a letter to the EU’s foreign policy chief obtained by Reuters Thursday, a day after it trumpeted several advances in nuclear know-how and sent oil prices upward.

Iran’s president vowed no retreat from its nuclear program Wednesday but state television announced the proposal to re-launch talks after a year’s hiatus.

Iranian chief negotiator Saeed Jalili’s letter said he would have “new initiatives” but did not spell them out. He made one reference to “Iran’s nuclear issue,” without spelling out whether Tehran was prepared to negotiate on it.

French Foreign Minister Alain Juppe said that while the letter was “ambiguous” it seemed to signal “the start of opening up from Iran” with respect to discussing its nuclear activity.

A February 20-21 visit to Iran by top U.N. nuclear watchdog officials would help determine whether Tehran was serious about tackling international concerns, Juppe told reporters.

The U.N. team, led by the International Atomic Energy Agency’s chief inspector, will again try to extract Iranian explanations, after three years of stonewalling, for an IAEA investigation driven by intelligence reports that suggest Tehran has researched sophisticated ways to build atomic bombs.

VIENNA (Reuters) – Iran, facing harsher sanctions targeting its economically vital oil exports, has told world powers it wants to resume long-frozen talks soon but left vague whether it is ready to address concerns about its nuclear activity, as they insist.

Tehran made the offer in a letter to the EU’s foreign policy chief obtained by Reuters on Thursday, a day after it trumpeted several advances in nuclear know-how and sent oil prices upward with suggestions of economic reprisal in what may have been moves to boost its leverage before any fresh negotiations.

Iran’s president vowed no retreat from its atomic path on Wednesday only for state television to announce the proposal to re-launch talks after a year’s break – mixed signals making it difficult to divine what Tehran’s intentions were.

Iranian chief negotiator Saeed Jalili’s letter said he would have “new initiatives” but did not spell them out. He made one separate reference to “Iran’s nuclear issue,” without saying whether Tehran was prepared to negotiate on it.

His letter was a reply to one from Ashton in October in which she said the big powers could meet with Iran within weeks if it was ready to “engage seriously in meaningful discussions” tackling concerns about its nuclear quest.

Jalili said he welcomed an earlier statement by Ashton on respecting Iran’s right to the peaceful use of nuclear energy.

“No doubt by committing to this approach, our talks for cooperation based on step-by-step principles and reciprocity on Iran’s nuclear issue could be commenced,” said the English-language letter, obtained by Reuters.

VIENNA (Reuters) – Iran has proposed a resumption of long-stalled nuclear talks with world powers in which Tehran would have “new initiatives”, according to a letter from Tehran to European Union foreign policy chief Catherine Ashton obtained by Reuters on Thursday.

The brief letter, which offered no specific proposals in the nuclear dispute, may not convince Western states that Iran is ready to enter the kind of substantive negotiations tackling its nuclear work they say is needed to resolve the longstanding row.

“We voice our readiness for dialogue on a spectrum of various issues which can provide ground for constructive and forward-looking cooperation,” said the letter, dated February 14, from Iranian chief nuclear negotiator Saeed Jalili.

The United States and its allies suspect Iran is seeking to develop nuclear weapons capability. Iran denies this, saying it is enriching uranium only for electricity to meet demands of its rapidly growing population.

Jalili’s letter was a response to one from Ashton in October, in which she said the big powers could meet with Iran within weeks if it was ready to “engage seriously in meaningful discussions” and address concerns about its nuclear work.

Ashton handles the Iran file on behalf of six world powers – the United States, Russia, China, Germany, France and Britain.

Negotiations have been frozen since a fruitless meeting in Istanbul in January 2011.