PRECIOUS-Gold eases in late trade as euro, stocks fall

                                
 * Euro retreats off 2-week high versus dollar, shares slip
                                
 * ETF Securities gold shrs top $500 million in assets
                                
 * PIMCO cuts gold exposure on valuation
                                
 (Recasts to update with New York comment, prices. Changes
byline, dateline.)
                                
 By Carole Vaporean and Amanda Cooper
                                
 NEW YORK/LONDON, June 16 (Reuters) - Gold drifted lower on
Wednesday as some short-term investors took profits off the
early rise to a one-week high above $1,237 an ounce, but
declines in the euro and in U.S. share prices hit the yellow
metal in late trade.
                                
 Spot gold <XAU=> slipped to $1,231.45 an ounce by 2:29 p.m.
EDT (1829 GMT) from $1,232.45 an ounce in late Tuesday trade in
New York. U.S. gold futures for August delivery <GCQ0> ended
$3.90 lower at $1,230.50 an ounce.
                                
 Analysts said they still think bullish factors underpin
gold prices, which hovered around unchanged levels for much of
the session. Concern about the unfolding debt crisis in Europe
and the global economic outlook continued to provide support.
                                
 Bill O'Neill, managing partner at LOGIC Advisors in New
Jersey said, news that Russia's central bank was looking to
diversify its currency holdings, could have given gold a lift.
                                
 "When I saw that, it brought to mind that they're probably
also looking to add some gold, which they have already done. I
think those types of things indicate the alternative asset
demand for gold is still there," said O'Neill.
                                
 Standard Chartered analyst Daniel Smith said the main focus
for gold is on liquidity.
                                
 "So what's tending to happen is people are tending to buy
gold and other assets at the same time," he said.
                                
 "We are going to push higher in the weeks ahead. The
pullback we saw from the previous highs is quite limited and
investors are still waiting to come into this market."
                                
 Gold hit a record high of $1,251.20 on June 8 and is now
just over 1 percent away from this level, as the euro zone debt
crisis has raised the risk of a slowdown in global economic
growth and triggered a broad investor push into perceived
safe-haven assets such as bullion or government bonds.
                                
 "The whole sovereign debt situation lingers on," said Ole
Hansen, senior manager at Saxo Bank in Copenhagen. "There will
be persistent fear that some government debt in Europe will
have to be readjusted, and that will lend support (to gold)."
                                
 Fresh concern about Spain's banking and credit system
knocked the euro off two-week highs against the dollar, and
forced the premium investors' demand for holding Spanish debt
over German bunds to a euro life high. [USD/]
                                
 A weaker euro, and consequently a stronger dollar,
historically has had a negative impact for gold, but this
correlation has broken down as investors have sought safety in
the U.S. currency.
                                
 U.S. stocks slipped as a warning from FedEx <FDX.N>, which
said higher costs could crimp profits next year, overshadowed a
surge in U.S. industrial production for May. [.N].
                                
 SPDR ETF HOLDINGS AT RECORD
                                
 Interest in physical gold kept holdings of the world's
largest gold-backed exchange-traded fund, New York's SPDR Gold
Trust <GLD>, at a record 1,306.137 tonnes on Tuesday.
                                
 Meanwhile, ETF Securities said its ETFS Physical Swiss Gold
Shares surpassed $500 million in total assets under management
as of June 8, when gold reached a record high. [ID:nN16223441]
                                
 The chief executive of PIMCO, the world's biggest bond
fund, said on Wednesday it had cut exposure to gold on
valuation. "At some point valuations became expensive and we
halved our exposure to gold," Mohamed El-Erian told Reuters TV.
                                
 For interview; http://link.reuters.com/pus22m
                                
 High prices are weighing on demand for gold in some key
bullion markets, such as India and the Middle East, and
encouraging more selling of scrap gold.
                                
 Istanbul Gold Exchange Chairman Osman Sarac told Reuters on
Wednesday that Turkey's 2010 gold imports will not exceed 2
tonnes, versus an earlier forecast of 40 tonnes.
[ID:nIST006995]
                                
 Spot silver <XAG=> eases to $18.46 an ounce by 2:27 p.m.
EDT (1827 GMT) from $18.49 late in the previous session.
                                
 The gold-silver ratio -- how many ounces of silver are
needed to buy an ounce of gold -- fell to its lowest this month
on Wednesday, meaning the metal is becoming increasingly
expensive compared with gold.
                                
 Spot platinum <XPT=> eased to $1,568.0 an ounce from
 $1,572.50 an ounce late Monday, while palladium <XPD=> moved
up to $472.00 against $469.50 per ounce previously.
 (Reporting by Carole Vaporean; Editing by Sofina Mirza-Reid)