* Euro bounces off 4-year low vs dollar
* Concerns euro zone austerity measures will hamper growth
* Safe haven buying to dominate gold buying in short term
(Updates prices, adds quotes)
By Maytaal Angel
LONDON, May 17 (Reuters) - Gold steadied on Monday as a
rally to record highs ran out of steam, but the uptrend was
expected to resume as concerns over Europe's debt crisis
continue to boost the metal's safe haven appeal.
Spot gold <XAU=> traded at $1,230.25 at 1452 GMT versus
$1,230.05 late in New York on Friday, having earlier hit a day
high of $1,242.10, just shy of Friday's all time high of
$1,248.95.
"We're seeing other markets suffering heavy losses and that
could cap gold in the short term because there is a tendency to
release profitable positions to pay for non-profitable ones,"
said Ole Hanson, analyst at Saxo Bank.
But he added: "I don't see a complete turnaround. The
momentum is with gold at the moment and, unless the market takes
a different view of the euro zone debt crisis, we'll remain
supported."
The euro steadied versus the dollar on Monday after hitting
a four-year low earlier as sovereign debt worries fuelled
concerns the single currency may fall further. [] []
Gold usually trades in step with the euro and counter to the
dollar as it is seen as an alternative asset to the U.S.
currency. However, the metal has recently been bought as a safe
haven asset and hedge against currency volatility.
"While we expect volatility to remain high with respect to a
strengthening U.S. dollar against the euro, safe-haven buying
will likely remain the predominant factor in price movements in
the coming weeks," Morgan Stanley said in a note.
U.S. gold futures <GCc1> rose $7 to $1,234.40 an ounce. Gold
priced in euros <XAUEUR=R> and sterling <XAUGBP=R> struck a
record high overnight as did gold futures in Shanghai <0#SHAU:>.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic of the gold technical outlook, click:
http://graphics.thomsonreuters.com/gfx/CT_20101705094907.jpg
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> DOUBT
Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust <GLD>, rose to a lifetime high of
1,214.065 tonnes as investors sought a safe haven from volatile
currencies and declines in stock markets.
Despite a $1 trillion rescue package for euro zone states,
investors still doubt fiscally weaker nations can improve their
finances, or do so without stunting overall growth in the
region, analysts said.
"There's still very good support for gold. The current
bail-out is just a sweetener. We'll need to wait and see whether
they put in place actual measures to prevent eventual default,"
Standard Bank analyst Walter de Wet said.
In other precious metals, silver <XAG=> was down at $19.15
an ounce versus $19.25, platinum <XPT=> fell to $1,686 versus
$1,715.50 while palladium <XPD=> dropped to $511.55 versus
$523.50.
Weighing on the platinum group metals, which are used to
make auto-catalysts, was news that new European car sales fell
for the first time in 10 months in April. []
Longer term, the outlook for the metals remain bright.
According to a Reuters poll, average platinum and palladium
price forecasts have climbed since January on quickly rising
spot prices and hopes for an uptick in investment and industrial
demand. []
Also, Johnson Matthey said in an annual report released
earlier that rising investment may take platinum to $2,000 an
ounce in the next six months while palladium could hit levels
not seen since 2001. []
For an interview with Johnson Matthey click []
For a factbox on platinum and palladium market balances
click: []
(Reporting by Maytaal Angel; Editing by Amanda Cooper)
