* Concern over European bank sector weighs on risk appetite
* Stocks ease, oil falls, but gold eyes record $1,264.90/oz
* Silver flirts with previous session's 2-1/2 yr high
(Updates with comments, refreshes prices)
By Amanda Cooper
LONDON, Sept 8 (Reuters) - Gold rose for a third day on
Wednesday, heading to within touch of another record high as the
waves of nervousness over the global economy steered investors
into perceived safe-haven assets.
Spot gold <XAU=> was bid at $1,258.15 an ounce at 1040 GMT
GMT, against $1,253.10 late in New York on Tuesday. U.S. gold
futures for December delivery <GCZ0> rose 90 cents to $1,260.20.
Gold has risen by about 15 percent so far in 2010 and is
could reach its third record high this year since an all-time
high of $1,264.90 in June, marking ten years of continuous
increases.
The rally has been driven in large part by the emergence of
the difficulties of several euro zone member states in covering
the spiralling cost of financing their debt burdens as the
regional economy sputtered.
Evidence of cracks in the U.S economic recovery and cooler
Chinese data, combined with doubt about the strenuousness of
stress tests conducted on European banks has created a
springboard for investors to dive into gold.
"It's a perfect storm, which will now take us up to
challenge the all-time high and maybe even make new highs," said
Credit Agricole analyst Robin Bhar.
"All the factors seem to have come together at a time when
physical dedmand is also propping up the makret, but as with all
the other precious metals, physical demand is probably not going
to be the factor trhat drives it to new highs. It has to be this
investment desire."
With the resilience of the U.S. recovery in question and the
premium investors demand in exchange for the risk of holding the
sovereign debt of certain euro zone members returning to the
record peaks seen in early May, gold is now less than 1 percent
shy of the late June high.
STALLING
The metal has hit tough resistance at $1,260 an ounce, just
below its all-time high, but analysts say they are confident in
the metal's rise.
"It seems to be benefiting from equity weakness, the renewed
euro zone sovereign debt jitters and possibly concerns about new
U.S. spending measures," said Citigroup analyst David Thurtell.
He said while some funds would be selling ahead of technical
resistance at $1,260, "it's looking good".
UBS precious metals strategist Edel Tully said she had
upgraded her gold price forecasts based on gold's traditional
outperformance in September, coupled with safe-haven demand
emanating from the focus on sovereign fiscal burdens.
"Given the range of factors conspiring to push gold higher
in September, we raise our one-month forecast to $1,300, from
$1,230 previously. We also lift our three-month target to
$1,300, from $1,200 previously," she wrote in a report.
Major European stock markets followed Asia lower and the
euro was on the defensive, after renewed fears about the euro
zone banking system drove the single currency to life lows
against the Swiss franc and Australian dollar and hurt financial
stocks. [] []
Gold usually suffers at the hands of strength in the U.S.
dollar, but with economy bears sharpening their claws as the
euro declines, the two are moving in more direct correlation in
their capacity as refuge in times of financial turbulence.
Heightened risk aversion was also reflected on the bond
markets, where German Bund prices extended gains, driven by
worries about the banking sector and after Ireland extended its
guarantee for short-term bank liabilities. []
OIL FALLS FOR THIRD DAY
Among other commodities, oil fell for a third session to
below $74 a barrel, pressured by rising U.S. petroleum
stockpiles and as a decline in equities reflected investors'
attempts to reduce risk exposure. []
Elsewhere silver <XAG=> also rose 0.4 percent to $19.95 an
ounce from $19.83, having earlier approached the previous
session's high at $20, its highest in 2-1/2 years.
Platinum <XPT=> was at $1,554.50 an ounce against $1,553.03,
while palladium <XPD=> was at $522.05 against $520.85.
The metals have taken support in recent weeks from strikes
going on in major platinum group metals producer South Arica,
though the mining industry itself has been little affected.
"It is the climate of industrial action throughout the
country that we believe is important and may hold relevance for
platinum prices," said HSBC in a note. "South Africa produces
three-quarters of the world's platinum output."
"Unlike gold, platinum's supply/demand balances are tight,
with relatively little refined platinum held in above-ground
storage."
(Additional reporting by Jan Harvey; editing by Keiron
Henderson)
