PRECIOUS-Euro-gold at record highs as debt crisis spreads
(Updates with comment, prices)
* Gold in euros hits record highs as dollar rises
* Demand likely to remain high
* Coming up: Euro zone May industrial production; July 13, 0900 GMT
By Amanda Cooper
LONDON, July 12 (Reuters) - Euro-priced gold rose to a second consecutive record on Tuesday, driven by investors who found little comfort in the pledges from European Union officials to contain the spread of the debt crisis across the single currency bloc.
The strength of the dollar , which rose to four-month highs, dented the price of gold in the U.S. currency, while bullion priced in high-yielding currencies rallied.
Euro zone finance ministers promised cheaper loans, longer maturities and a more flexible rescue fund on Monday to help Greece and other EU debtors in a bid to stop financial contagion engulfing Italy and Spain.
While gold has attracted a stream of safe-haven buying, this has been relatively muted, not least because of the effect of the slower demand that is typical of northern hemisphere summer months, which could mean prices may struggle to make further headway, analysts said.
Spot gold was down 0.2 percent on the day at $1,550.50 an ounce by 1355 GMT, having risen in each of the last six trading sessions, while gold in euros was up 0.3 percent, set for a third daily rise, at 1,109.60 euros an ounce, having hit a record 1,118.58 earlier.
COMEX August gold futures GCcv1 eased 0.4 percent to $1,542.50.
"Any massive (long position holders) won't be selling off right now, because there is too much uncertainty," said VTB Capital analyst Andrey Kryuchenkov.
"The only question that remains now is whether we see developments in the euro zone kicking off out of all proportion and gold running higher or we see some gradual gains and then some profit-taking near the highs," he said.
Global holdings of gold in exchange-traded funds have risen in seven out of the last ten trading days, bringing the rolling weekly inflow to 142,000 ounces, the largest in three weeks, but holdings are still down by about 0.2 percent this year.
"Gold is well supported, it probably still has some time to go, but it doesn't look like we've seen a massive rush for gold," VTB's Kryuchenkov said.
The next two key risk events for gold will be U.S. Federal Reserve Chairman Ben Bernanke's semi-annual testimony on monetary policy to Congress on Wednesday and the release of the results of the European Banking Authority's health check of 91 banks from across the EU on Friday.
Gold priced in higher-yielding currencies, which also suffered the brunt of investor distaste for risk, such as the Australian dollar , the South African rand or the Canadian dollar , also rallied.
Gold priced in currencies other than the dollar also largely shrugged off weakness in more economically-sensitive industrial commodities such as crude oil LCOc1, palladium or copper .
"We'll probably see a lot of support for gold from rising risk aversion due to concerns of escalating debt in Europe," said Natalie Robertson, a commodities analyst at ANZ.
"Although the rising dollar could pare back some of the interest in gold."
Many analysts believe gold could return to the all-time high of $1,575.59 set on May 2, but any rapid sell-off in equities or other commodities could dent it as investors sell bullion to cover losses elsewhere.
Adding to the uncertainty over the outlook for the euro zone, the International Monetary Fund is not yet ready to discuss conditions or terms of a second Greek bailout, the fund's new managing director, Christine Lagarde, said on Monday, adding that Italian economic growth had to improve, in addition to fiscal consolidation, to restore confidence?.
Spot silver fell by more than 1.0 percent on the day to $35.32 an ounce, pushing the gold/silver ratio -- or number of ounces of silver needed to buy one ounce of gold -- to 44.1, just shy of mid-June's four-month high of 44.5.
Platinum was last flat at $1,721.50 an ounce, while palladium fell 0.5 percent to $760.22. (Additional reporting by Rujun Shen in Singapore; editing by Keiron Henderson)
- Tweet this
- Share this
- Digg this