* Euro steadies versus the dollar in choppy trade
* Gold priced in euro, sterling hits all-time highs
* Strength in gold lifts silver to one-month high
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, March 2 (Reuters) - Gold extended gains to a
one-week peak in dollar terms on Tuesday and rallied to record
highs when priced in sterling and the euro as volatility in the
foreign exchange markets boosted buying of the precious metal.
Uncertainty over plans to tackle Greece's fiscal crisis and
worries the next British election may lead to a hung parliament
have heightened instability in the European currencies, lifting
interest in gold as an alternative asset, analysts said.
Spot gold <XAU=> was bid at $1,127.60 an ounce at 1541 GMT,
against $1,118.40 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 $10.90 to $1,129.20 an ounce.
Euro-denominated gold <XAUEUR=R> hit a record high of 833.48
euros an ounce, up from 823.66 euros late on Monday, while gold
priced in sterling <XAUGBP=R> touched a record 756.95 pounds an
ounce, up from 744.85 pounds.
"Euro gold has definitely outperformed the drop in
euro-dollar by almost 1 percent in the last 10 days," said
Mitsubishi Corp precious metals strategist Tom Kendall. "That
does reflect some nervousness about stability of sovereign debt,
and stability of the euro itself."
"The same goes for the UK, with the added overlay of
uncertainty running into the (general) election," he added.
The euro was little changed versus the dollar on Tuesday,
having earlier hit a 9 1/2-month low in choppy trade, as
investors awaited Greece's new austerity plans to tackle its
debt crisis. []
Fears over the fiscal health of peripheral euro zone
economies have weighed heavily on the euro so far this year,
knocking it down by more than 5.5 percent against the dollar.
The European Union on Monday urged Greece to agree
additional austerity measures within days to tackle its fiscal
crisis. Greek officials said a cabinet meeting on the economy
will take place on Wednesday. []
Adding to pressure on the euro, former European Central Bank
economist Otmar Issing said Greece should turn to the
International Monetary Fund rather than other euro zone states
for help in tackling its debt crisis. []
STERLING GOLD HITS HIGH
Sterling-denominated gold rose as the British currency was
driven lower by fears that the next UK general election could
result in a hung parliament.
That could mean an incoming government would struggle to
take the action necessary to reduce debt, analysts said.
"Markets fear the UK government will be forced to create
more sterling in order to buy their own government bonds and
that quantitative easing and debt monetisation may continue for
longer than expected," bullion dealer GoldCore said in a note.
"The Bank of England continuing to punish savers with near
zero percent interest rates at 0.5 percent while inflation
appears to be looming is also contributing to concerns about a
new sterling currency crisis."
This could lead to further gains in gold, it added. For a
graphic showing gold's performance in sterling terms, click on:
http://graphics.thomsonreuters.com/310/GLD_STL0310.gif
In the physical market, sales of gold scrap picked up in
Southeast Asia due to recent gains in bullion prices, while
Indian buyers stayed on the sidelines. []
Elsewhere, silver <XAG=> tracked gold higher to hit a
one-month high at $16.76 an ounce, and was later at $16.75 an
ounce against $16.45.
Platinum <XPT=> was bid at $1,562 an ounce versus $1,546.50,
and palladium <XPD=> at $437.50 an ounce versus $433.50.
"For the first time, the platinum ETF that was launched in
the United States at the beginning of this year faced outflows
of 25,000 ounces," said Commerzbank in a note.
"Obviously, short-term oriented speculative investors
withdrew, after platinum did not deliver the price performance
they had hoped for."
(Editing by Sue Thomas)
