* Gold holds steady as other assets classes decline
* Bullion seen building on gains after Q2 outperformance
* Platinum, palladium biggest fallers on growth concerns
(Updates prices)
By Jan Harvey
LONDON, July 1 (Reuters) - Gold held steady around $1,240 an
ounce in Europe on Thursday, supported by concern over weak
global growth, which is weighing on more economically sensitive
assets such as stocks and industrial commodities.
Gold is expected to extend its recent gains in the medium
term, analysts say, after outperforming most other commodities
and all other metals in the second quarter as investors turned
to bullion as a haven from risk in the wider markets.
Spot gold <XAU=> was bid at $1,241.85 an ounce at 1225 GMT,
against $1,241.35 late in New York on Wednesday. U.S. gold
futures for August delivery <GCQ0> eased $4.70 to $1,241.40.
Concerns over financial stability and the strength of the
economic recovery lifted the metal to a record $1,264.90 an
ounce last month, but it has struggled to make fresh gains.
"It is not unusual for gold to trade in this way, with a
period of consolidation after a healthy price rise," said
Michael Widmer, an analyst at Bank of America-Merrill Lynch.
Investors are awaiting key U.S. payrolls data on Friday for
an indicator for the next direction of trade, he said.
"The labour market report is quite critical because a lot of
the recent consumer confidence drop came about because people
are concerned about their employment prospects," he said.
"If you do get a slowdown, the picture for some of the
cyclical asset classes may be perceived to be not as strong...
and that could be quite positive for gold overall."
European shares hit a three-week low and charts pointed to
further losses as concern about the global economic recovery and
funding conditions in Europe forced investors to the sidelines.
[]
Data that showed the pace of manufacturing growth in China
slowed in June, also weighed on industrial commodities. Oil fell
1 percent, extending recent losses, while base metals like
copper, zinc and nickel all declined. [] []
Many commodities struggled in the second quarter as a
soaring dollar and doubts about the strength of the economic
recovery sapped demand for raw materials.
The benchmark Reuters Jefferies CRB index <.CRB>, which
covers 19 mostly U.S.-traded commodities, finished down about
5.4 percent, its second quarterly loss in a row.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic showing commodities' relative price
performance in the first half, click on:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
EURO REBOUNDS
The euro <EUR=> rebounded versus the dollar, however, as
concerns receded over the ability of European banks to repay 442
billion euros in loans to the European Central Bank. []
Investment in gold was solid, with holdings of the world's
largest gold-backed exchange-traded fund, New York's SPDR Gold
Trust <GLD>, still at a record 1,320 tonnes on Wednesday.
Demand for physical bullion in major consumer India was
slack, however, as high prices and seasonal factors weighed.
India saw a sharp drop in imports in June, signalling recent
record prices are weighing on demand even as the world's largest
ETF reported record holdings. []
Elsewhere, gold priced in Canadian dollars <XAUCAD=R> hit a
record C$1,324.61 as the currency fell. Among other precious
metals, silver <XAG=> was bid at $18.47 an ounce against $18.55.
Platinum group metals, largely used in manufacturing
catalytic converters, were the biggest fallers, with platinum
<XPT=> down to $1,513.05 an ounce against $1,531.50 and
palladium <XPD=> slipping to $438.13 against $442.
"Both could look to extend back towards chart support around
$1,490/$430 on a combination of technical selling and China
growth concerns," said TheBullionDesk.com analyst James Moore.
"Today's U.S. auto sales data will also be monitored for a
possible slowdown in demand."
(Reporting by Jan Harvey; Editing by Keiron Henderson)
