* Greece asks for activation of euro zone, IMF aid
* Euro off 1-yr low vs dollar, but investors still cautious
* Gold-dollar link seen weakening throughout 2010
(Updates prices, adds detail, comment)
By Jan Harvey
LONDON, April 23 (Reuters) - Gold held near $1,140 an ounce
on Friday, caught between contrasting pressures, as persistent
fears over Greece's ability to deal with its debt supported the
metal's haven appeal but stoked concern over the euro's outlook.
Greek Prime Minister George Papandreou asked on Friday for
the activation of a euro zone and International Monetary Fund
aid package aimed at pulling the debt-laden country out of a
debt crisis. []
But analysts and investors were sceptical that the Greek
request would mark the end of the debt crisis that has engulfed
the country this year.
Spot gold <XAU=> was bid at $1,139.45 an ounce at 1039 GMT,
against $1,140.45 late in New York on Thursday. U.S. gold
futures for June delivery <GCM0> on the COMEX division of the
New York Mercantile Exchange eased $2.70 to $1,140.20 an ounce.
"The markets are looking through all this news at this
stage," said Standard Bank analyst Walter de Wet. "There are
still so many unknowns."
"Greece has asked to access the aid, but we still need EU
buy-in, and there are all kinds of conditions," he added. "We
are still in a wait-and-see situation. I don't think we are
going to see much movement before New York comes in."
The dollar earlier hit one-year highs against the euro,
keeping up pressure on gold, as investors worried Greece would
have to seek a bailout to avoid default. While it later gave up
those gains, investors remain nervous towards the euro. []
Gold usually has a close inverse relationship to the dollar,
falling as the U.S. currency strengthens. However, that link has
weakened, with gold prices rising 4 percent since the start of
the year despite the dollar's 7 percent climb versus the euro.
Barclays Capital analyst Suki Cooper said gold is benefiting
from better appetite for the metal among short-term investors,
adding she expects gold's relationship to the euro-dollar to
weaken as the year progresses.
"Other concerns, like inflation and sovereign debt risk,
will come into play more, and we will see investors turning to
gold," she said.
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For a graphic showing gold's correlation to the euro/dollar
exchange rate, click on: http://link.reuters.com/ham96j
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UNCERTAINTY MOUNTS
Sovereign risk fears are likely to support gold as investors
turn to the metal as a haven from volatility in other assets,
analysts said.
"As the level of uncertainty around Greece and other weak
European states mounts, gold prices may be supported by 'safe
heaven' demand even in light of a stronger U.S. dollar," said
John Meyer, an analyst at Fairfax investment bank, in a note.
"The IMF has warned recently that growing sovereign debt
levels are the major threat to the global economy," he added.
"Gold investments may protect against currency devaluation in
times of rising government debts."
Gold priced in euros <XAUEUR=R> rose to a peak of 863.28
euros an ounce in Asian trade, close to the record high of
864.75 euros an ounce it reached earlier this month.
Among other precious metals, silver <XAG=> was at $17.89 an
ounce against $17.95, platinum <XPT=> at $1,730 an ounce against
$1,740, and palladium <XPD=> at $556.50 against $561.
Autocatalyst materials platinum and palladium are succumbing
to profit taking, dealers said. Their gains have outstripped
those of other precious metals this year amid expectations car
demand will rise after last year's slump.
(Editing by Veronica Brown)
