* Worries about euro austerity measures will hamper growth
* Safe-haven buying to dominate gold buying in short term
* Platinum could hit $2,000 on investment - report
* Coming up: U.S. April housing starts on Tuesday
(Updates prices to market close)
By Frank Tang and Maytaal Angel
NEW YORK/LONDON, May 17 (Reuters) - Gold was largely flat
on Monday after a rally to record highs in the previous
session, but jitters that a European rescue could be too late
to stop the spread of a debt crisis provided safe-haven
demand.
Platinum and palladium tumbled on the back of industrial
metals' broad decline led by copper's 6 percent slide. A
closely watched industry report, however, said rising
investment could take platinum to $2,000 an ounce in the next
six months. []
"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 nonprofitable ones,"
said Ole Hanson, analyst at Saxo Bank.
U.S. stock markets lost about 1 percent, while the
commodity complex also dropped sharply as crude oil dropped to
$70 a barrel.
Safe-haven play due to economic uncertainties should keep
the yellow metal firm, analysts said.
"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," Hanson said.
Spot gold <XAU=> was at $1,227.85 at 2:36 p.m. EDT (1836
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.
U.S. June gold futures <GCM0> settled up 30 cents at
$1,228.10 an ounce.
COMEX open interest dropped below 590,000 lots as of May 14
but still held near an all-time set on May 13, indicating
rising price volatility, traders said.
Volatility in the currency markets also boosted gold. Gold
priced in euros <XAUEUR=R> and sterling <XAUGBP=R> struck a
record high overnight as did gold futures in Shanghai
<0#SHAU:>.
The euro fell against the dollar on Monday, at one point
slipping to a four-year low, on persistent fears euro zone
austerity measures will cause a downturn in the region and
stifle global growth. []
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.
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http://graphics.thomsonreuters.com/gfx/CT_20101705094907.jpg
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ECONOMIC UNCERTAINTY BOOSTS METALS
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
bailout 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 $18.92
an ounce versus $19.25, platinum <XPT=> fell to $1,661.50
versus $1,715.50 while palladium <XPD=> dropped to $501.50
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. []
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. []
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1228.10 0.3 0.0 1096.20 12.0
US silver <SIN0> 18.859 -0.366 -1.9 16.845 12.0
US platinum <PLN0> 1663.20 -52.20 -3.0 1471.00 13.1
US palladium <PAM0> 503.60 -24.30 -4.6 408.85 23.2
Prices at 2:39 p.m. EDT (1839 GMT)
Gold <XAU=> 1228.20 -1.85 -0.2 1096.35 12.0
Silver <XAG=> 18.92 -0.33 -1.7 16.84 12.4
Platinum <XPT=> 1661.50 -54.00 -3.1 1465.50 13.4
Palladium <XPD=> 501.50 -22.000 -4.2 405.50 23.7
Gold Fix <XAUFIX=> 1236.00 5.75 0.5 1104 12.0
Silver Fix <XAGFIX=> 19.11 -53.00 -2.7 16.99 12.5
Platinum Fix <XPTFIX=> 1692.00 2.00 0.1 1466 15.4
Palladium Fix<XPDFIX=> 515.00 0.00 0.0 402 28.1
(Reporting by Frank Tang and Maytaal Angel; Editing by Lisa
Shumaker)
