* Euro gains, Wall St. rally prompt outflow from gold
* 200 point advance in Dow dents safe-haven demand
* Coming up: U.S. May retail sales due on Friday
(Recasts, updates prices to market close, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, June 10 (Reuters) - Gold fell 1 percent on Thursday,
as a sharp Wall Street rally and rebounding risk appetite prompted
investors to switch funds out of precious metals and into assets
perceived as risker.
The euro's advance for a third straight day, gains in industrial
commodities including oil, and a 200 point gain of the Dow Jones
industrial average lessened gold's appeal as a safe haven amid
European credit contagion fears.
"Lately, when people are more risk averse, they go to the stock
market. When there is uncertainty, gold seems to pick up demand,"
said Jeff Pritchard at California broker-dealer Altavest.
In the first quarter of this year, gold tended to take the lead
from the equity markets and other "risky assets." Since mid-March,
however, the metal has been rallying on worries that a deepening
euro zone debt crisis could lead to double-dip recession.
Spot gold <XAU=> hit a low of $1,214.65 and was at $1,218.25 an
ounce at 2:18 p.m. EDT (1818 GMT), against $1,230.35 late in New
York on Wednesday.
U.S. gold futures for August delivery <GCQ0> settled down $7.70
at $1,222.20.
Gold was pressured as the euro <EUR=> bounced above $1.21 after
European Central Bank President Jean-Claude Trichet's noncommittal remarks on further bond purchases. The bank held interest rates at
1.0 percent. []
Trichet also said after the ECB decision that he expects the
euro zone's economy to recover at a moderate pace, with quarterly
growth rates uneven.
News that China's exports jumped 50 percent in May also lifted
stock markets, which had started to rise on Wednesday after Federal
Reserve Chairman Ben Bernanke said the economic recovery was on a
solid footing. []
"With growth potential back on track both in the euro zone and
the U.S., risk could get offloaded from bullion, and that is
potential a weakness signal," said Pradeep Unni, senior analyst at
Richcomm Global Services.
Heavy losses in the euro on the back of European sovereign debt
concerns have lifted demand for gold this year as investors sought
to diversify out of the currency, analysts said. The euro's bounce
higher has curbed this buying.
"If you look at a chart of the euro, it's been punished quite
severely for some time now, and it is not unreasonable to believe
that it will have a bit of a bounce along the way," said Simon
Weeks, head of precious metals at the Bank of Nova Scotia.
COIN, BAR DEMAND SOFTENS
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, held at a record high
1,298.53 tonnes on Wednesday. []
However, demand for small investment products like coins and
bars has tailed off recently in Europe and the United States, UBS
analyst Edel Tully said in a note.
"Physical demand, relatively dampened since Wednesday of last
week, is now overshadowed by increased scrap supply out of Asia,"
she said. "This price-dependent supply... suggests more downside
risk for the yellow metal in the short term."
Also on the supply side of the market, Statistics South Africa
said the republic's gold output fell 6.2 percent in April from the
same month of 2009. []
Among other precious metals, silver <XAG=> was at $18.27 an
ounce versus $18.07, palladium <XPD=> at $445 versus $447.50, and
platinum <XPT=> at $1,532.50 an ounce against $1,525.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCQ0> 1222.20 -7.7 -0.6 1096.20 11.5
US silver <SIN0> 18.351 0.162 0.9 16.845 8.9
US platinum <PLN0> 1536.20 2.20 0.1 1471.00 4.4
US palladium <PAU0> 449.30 -5.95 -1.3 408.85 9.9
Prices at 2:27 p.m. EDT (1827 GMT)
Gold <XAU=> 1218.25 -12.10 -1.0 1096.35 11.1
Silver <XAG=> 18.27 0.20 1.1 16.84 8.5
Platinum <XPT=> 1532.50 7.50 0.5 1465.50 4.6
Palladium <XPD=> 445.00 -2.500 -0.6 405.50 9.7
Gold Fix <XAUFIX=> 1217.50 -2.50 -0.2 1104 10.3
Silver Fix <XAGFIX=> 17.98 -29.00 -1.6 16.99 5.8
Platinum Fix <XAGFIX=> 1530.00 7.00 0.5 1466 4.4
Palladium Fix<XAGFIX=> 450.00 2.00 0.4 402 11.9
(Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy)
