* ECB warns euro zone banks may see second wave of losses
* Upbeat U.S. data lifts euro from 4-yr low versus dollar
* Oil, industrial metals pare earlier losses
(Updates prices)
By Jan Harvey
LONDON, June 1 (Reuters) - Gold rose towards $1,230 an ounce
on Tuesday as investors bought the metal as a haven from debt
problems in the euro zone, after the European Central Bank
warned the region's banks may face a fresh wave of losses.
Spot gold was bid at $1,228.25 an ounce at 1525 GMT, against
$1,214.20 late in New York on Monday. U.S. gold futures for June
delivery on the COMEX division of the New York Mercantile
Exchange rose $15.40 to $1,227.90 an ounce.
The metal is drawing support from concerns that sovereign
debt problems in euro zone countries like Greece, Spain and
Portugal may ultimately damage the wider economy.
"The macroeconomic problems in the global economy (are)
primarily to do with the massive debts of sovereign states,"
said Angelos Damaskos, chief executive officer of Sector
Investment Managers Ltd.
"The only realistic solution to finance that kind of debt is
to print a lot of money and deflate away from the debt. That
would be inflationary in the short term."
He said investors who felt the world's main currencies --
the dollar, euro and pound -- were being undermined by sovereign
debt concerns were looking for alternative assets. "They will
look at traditional stores of value such as gold," he said.
The ECB warned on Monday that euro zone banks face up to 195
billion euros ($236.9 billion) in a "second wave" of potential
loan losses over the next 18 months due to the financial crisis.
The euro tumbled more than 1 percent in response to a
four-year low against the dollar. It later pared losses as
supportive U.S. manufacturing and construction spending reports
helped Wall Street stocks, but remains under pressure.
Gold has historically moved in the opposite direction to the
U.S. currency, but both have benefited from safe-haven buying
this year.
INVESTMENT DEMAND REMAINS
Investment demand for gold held steady, with holdings of the
world's largest gold exchange-traded fund, New York's SPDR Gold
Trust, still at a record 1,267.93 on Monday.
Sean Corrigan, chief investment strategist at Diapason
Commodities Management, said he saw gold and to a lesser extent
silver as "insurance policies" against risk in the wider market,
Reuters' technical analysis suggests gold is likely to find
resistance near $1,229 an ounce. If it breaks this, it could
re-challenge its May 14 record of $1,248.95 an ounce.
Prices of other commodities recovered, after earlier posting
heavy losses as buyers worried that soft manufacturing data from
China and Europe suggested demand for raw materials may decline.
Crude oil benefited from supportive U.S. economic data to
rise back above $74 a barrel, while industrial metals also pared
losses. Copper earlier fell to a one-week low.
Their recovery helped silver reverse early losses to turn
positive. The grey metal was bid at $18.65 an ounce against
$18.49, having earlier touched a low of $18.24.
Platinum was at $1,553.50 an ounce against $1,558.50, while
palladium was at $459 against $465.10.
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For a graphic showing price performances for commodities in
2010: http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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(Editing by Keiron Henderson)
