* Investors buy gold to hedge against debt fears in Europe
* Stronger euro helps drive gold to two-week highs
* Euro-priced gold hits record high at 819.07 euros/oz
* Oil prices jump above $76/bbl on weak dollar, Iran
(Recast, adds analyst quote and background)
By Alonso Soto and Jan Harvey
NEW YORK/LONDON, Feb 16 (Reuters) - Gold rallied to
two-week highs on Tuesday as the euro recovered from recent
hefty losses against the dollar and investors snapped up gold
to hedge against debt default risks in Europe.
While sentiment for the euro remained shaky overall -- a
factor that would normally undermine dollar-denominated bullion
-- analysts said the precious metal would find support amid
worries over the fiscal health of euro zone economies, chiefly
Greece.
Those concerns helped send euro-priced gold to a record
high of 819.07 euros an ounce.
"Gold is being used a hedge due to increased risks in
Europe. And you also have a response to higher oil prices and
rising tensions in the Middle East," said Bart Melek, Global
Commodity Strategist with BMO Nesbitt Burns in Toronto. "The
euro is up and that is certainly a catalyst."
Spot gold was bid at $1,118.80 an ounce at 4:04 p.m. EST
(2104 GMT), against $1,100.50 late in New York on Monday. It
earlier hit a high of $1,120.80.
U.S. gold futures for April delivery <GCJ0> settled up
$29.80, or 2.73 percent, at 1,119.80 an ounce, the highest
level on a settlement basis since Jan. 19.
The euro rallied against the dollar on Tuesday, marking its
biggest one-day gain since July. []
Gold has risen steadily this week as investors concerned by
the fiscal health of a number of smaller euro zone countries,
including Greece, Portugal and Spain, bought the metal as a
hedge against currency market instability.
The bullion posted its biggest annual gain in three decades
last year on the back of worries over currencies' depreciation
and expectations of long-term inflation as the world economy
emerges from recession.
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Commodities stronger in euro terms:
http://link.reuters.com/dad89h
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EURO REBOUNDS
As well as euro-denominated gold, gold priced in sterling
and South African rand also rose to one-month highs. Gold's
current performance in dollar terms does not reflect the
precious metal's true strength, analysts said.
"International financial contagion remains a risk and the
cost of insuring sovereign debt is rising for all countries
internationally," said bullion trader GoldCore in a note.
"As long as there remains the risk of the ignition of what
is being called the global debt time bomb, it is hard to see
how gold will not remain in strong demand."
Among other commodities, oil prices rallied 3.9 percent to
$77 a barrel, 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, were steady
on Monday, while gold demand in India, traditionally the
world's biggest consumer, retreated. []
[]
Silver <XAG=> was at $16.10 an ounce versus $15.52, having
earlier touched a peak of $16.19, its strongest since Feb. 4.
Platinum <XPT=> rose to $1,535 an ounce versus $1,512.50
and palladium <XPD=> at $430 versus $418.50.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1119.80 29.8 2.7 1096.20 2.2
US silver <SIH0> 16.148 0.701 4.5 16.845 -4.1
US platinum <PLJ0> 1537.70 26.60 1.8 1471.00 4.5
US palladium <PAH0> 432.45 14.30 3.4 408.85 5.8
Prices at 4:01 p.m. EST (2101 GMT)
Gold <XAU=> 1118.50 18.00 1.6 1096.35 2.0
Silver <XAG=> 16.10 0.58 3.7 16.84 -4.4
Platinum <XPT=> 1536.00 23.50 1.6 1465.50 4.8
Palladium <XPD=> 430.50 12.000 2.9 405.50 6.2
Gold Fix <XAUFIX=> 1115.25 0.00 0.0 1104 1.0
Silver Fix <XAGFIX=> 15.82 25.00 1.6 16.99 -6.9
Platinum Fix <XPTFIX=> 1534.00 4.00 0.3 1466 4.6
Palladium Fix<XPDFIX=> 431.00 0.00 0.0 402 7.2
(Reporting by Alonso Soto; Editing by Lisa Shumaker)
