* SPDR Gold ETF breaks 800-tonne level to set new record
* Euro steadies after recovering from lows vs the dollar
* Oil claws back losses to turn higher
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Jan 21 (Reuters) - Gold recovered early losses to
firm in Europe on Wednesday, boosted by interest in bullion as a
haven from risk, but remained off the previous session's 11-day
high as the euro gave up gains versus the dollar.
Spot gold <XAU=> was quoted at $860.20/862.20 an ounce at
0941 GMT against $855.20 late in New York on Tuesday.
The precious metal hit a high of $865.80 on Tuesday as risk
aversion prompted funds to buy the precious metal as a haven
from risk. This interest is still supporting the precious metal,
though a firm dollar is limiting gains.
"Gold spiked up yesterday after falling to initial
supports," said Pradeep Unni, senior analyst at Richcomm Global
Services.
"The rally came despite the U.S. dollar's rise against major
currencies especially the euro and sterling. The gains have been
purely supported by fresh asset allocation and investment
demand."
"The euro seems be witnessing more of a dead cat bounce
today after slipping by more than 250 points yesterday," he
added, meaning the euro's uptick was likely to be brief and
unsustainable.
Strength in the dollar versus the euro typically pressures
gold, which is often bought as an alternative investment to the
U.S. currency. []
However, this factor is currently being outweighed by
investment interest.
Gold looks likely to be supported by buying from risk-averse
investors as the economic outlook remains murky, with more bad
news expected to hurt equity markets.
European shares extended losses early on Wednesday, as fears
over the global economy and the financial industry deepened.
[]
"Given the ongoing deterioration of the global economy and
the risk aversion of investors the metal looks set to benefit
further from safe-haven demand," said James Moore, an analyst at
TheBullionDesk.com.
SPDR BREAKS 800-TONNE LEVEL
Investment in bullion exchange-traded funds, which issue
securities backed by physical stocks of the metal and are seen
as a relatively low-risk investment, was one of the key drivers
of Tuesday's price gains.
The world's largest gold-backed ETF, New York's SPDR Gold
Trust <GLD>, said its holdings rose 1 percent on Tuesday to
breach the 800-tonne barrier for the first time ever.
[]
In December SPDR took over from the Bank of Japan as the
world's seventh largest holder of gold. With the economic
outlook gloomy and worries about longer term inflation rife,
investors' confidence in bullion is firm.
"The next few months gold is likely to be very volatile,"
said Fairfax investment bank analyst John Meyer.
"However, longer term, the stimulus plans by the United
States and printing of money are likely to lead to devaluation
of the dollar which will lift gold prices."
Among other precious metals, silver <XAG=> climbed to
$11.42/11.50 an ounce from $11.11 late in New York on Tuesday.
Platinum <XPT=> was relatively steady at $932/937 an ounce
from $937.50, while palladium <XPD=> was unchanged at $182/187
an ounce against $182.
Both metals have steadied after posting dramatic losses on
the back of falling demand from the automotive industry, which
typically accounts for some 50 percent of platinum and palladium
demand.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
