* Concern lingers over outlook for some euro zone economies
* Euro-priced gold hits record high at 817.59 euros/oz
* Oil prices jump above $75/bbl on weak dollar, Iran
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Feb 16 (Reuters) - Gold prices rallied 1.6 percent
in Europe on Tuesday to a two-week high of $1,116.65 an ounce as
investors bought the metal to hedge against financial risk in
the euro zone, and as the euro rebounded versus the dollar.
Lingering concerns over the outlook for peripheral euro zone
economies, most notably Greece, helped send gold priced in euros
<XAUEUR=R> to a record high at 817.59 euros an ounce.
Spot gold <XAU=> was bid at $1,113.80 an ounce at 1112 GMT,
against $1,100.50 late in New York on Monday. U.S. gold futures
for April delivery <GCJ0> on the COMEX division of the New York
Mercantile Exchange rose $24.20 to $1,113.70 an ounce.
Gold is also benefiting from weakness in the dollar as it
re-establishes its traditional relationship with the U.S. unit,
under which the metal rises in value as the dollar weakens.
"Over the last week or so we've had this traditional (link)
between the dollar and gold disconnecting, so you have seen the
dollar strengthen and gold strengthen," said Jeremy East, global
head of commodity derivatives trading at Standard Chartered.
"I am sure the situation in Greece has contributed to that."
Those concerns, and persistent weakness in the single
currency, pushed euro-priced gold to record highs near 820 euros
an ounce on Tuesday. For a graphic of euro terms, click on:
http://graphics.thomsonreuters.com/0210/CMD_EUR0210.gif
"Alongside long-term inflation fears, looming risks in the
euro zone are obviously driving investors into gold, with Greece
remaining the dominating theme," said Commerzbank in a note.
"Greece's public-debt crisis, remaining a sword of Damocles,
will drive investors to view gold as a safe haven again."
The bank added that the outcome of a two-day meeting of euro
zone finance ministers in Brussels, which is due to conclude on
Tuesday, was being closely eyed by the market. []
EURO REBOUNDS
Standard Chartered's East added some institutional investors
may be getting back into the market after a sharp drop in
speculative net long positions in New York gold futures in the
last month.
Gold prices rose along with a rebound in the euro on
Tuesday, with the single currency recovering some recent losses
as investors took profits after concluding much of the bad news
on Greece's public finances was priced in. []
However, the euro remains vulnerable to further losses as
uncertainty over the outlook for Greece's debt problems
persists, traders said.
As well as euro-denominated gold, gold priced in sterling
<XAUGBP=R> and South African rand <XAUZAR=R> also rose to
one-month highs. Gold's current performance in dollar terms does
not reflect the precious metal's true strength, analysts said.
"It is important to concentrate not only on the dollar price
(of gold)," said VM Group analyst Matthew Turner. "Currently
$1,100 is much lower than it has been, but if you look in euros
that is not so true."
Among other commodities, oil prices rallied 1.5 percent to
above $75 per barrel on Tuesday, responding to the euro's gains
against the dollar and supported by tensions over pressure for
more sanctions against Iran. []
Elsewhere, holdings of the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust <GLD>, were
steady on Monday, while gold demand in India, traditionally the
world's biggest consumer, retreated. [] []
Among other precious metals, silver <XAG=> was at $15.77 an
ounce versus $15.52, platinum <XPT=> at $1,527.50 an ounce
versus $1,512.50 and palladium <XPD=> at $427.50 versus $418.50.
(Reporting by Jan Harvey; Editing by Amanda Cooper)
