* Gold reaches 4-month high on safe haven flows
* SPDR gold ETF holdings hit record high above 1,140 T
* Silver hits highest since January 20, tracking gold
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, April 9 (Reuters) - Gold rose to its highest level
this year on Friday as a downgrade of Greece's debt rating
refuelled fears over the euro zone's financial stability,
prompting buying of the metal as a haven from risk.
Spot gold <XAU=> peaked at $1,161.90, a four-month high, and
was bid at $1,160.90 an ounce at 1529 GMT, against $1,150.15
late in New York on Thursday.
Prices briefly retreated towards $1,150 an ounce earlier in
the day after talk that euro zone finance ministers had agreed
on the terms of possible emergency loans for Greece, but
recovered after Fitch cut the country's debt rating.
"The market was sold off earlier on rumours that a support
package had been agreed, and now (we see) the reverse," said
Simon Weeks, head of precious metals at the Bank of Nova Scotia.
Fitch Ratings on Friday cut Greece's credit ratings by two
notches and signalled further downgrades are possible, citing
the intensification of fiscal challenges in the debt-ridden
country. []
Gold has benefited from a flight to hard assets amid
persistent concerns over the fiscal health of debt-laden Greece
and other smaller euro zone economies such as Portugal, Italy
and Ireland, helping it shrug off dollar strength this week.
A recovery in the euro on Friday on speculation Greece may
receive help to deal with its public debt load is helping gold,
though simmering concerns over the country are still keeping
some pressure on the single currency. []
This fear factor is also lifting gold.
"The market is overall a little bit disappointed with all
the problems with Greece," said Afshin Nabavi, head of trading
at MKS Finance in Geneva. "A lot of people are turning to
commodities as a safe haven."
U.S. gold futures for June delivery <GCM0> on the COMEX
division of the New York Mercantile Exchange rose $9.50 to
$1,162.40 an ounce.
ETF HOLDINGS HIT RECORD
Investment interest in the precious metal has grown as
inflation and sovereign debt fears persist. Barclays Capital
said holdings of the 18 gold-backed exchange-traded products it
tracks set record highs on Thursday.
The world's largest gold-backed ETF, New York's SPDR Gold
Trust <GLD>, said its holdings rose nearly 10 tonnes to a record
1,140.433 tonnes on Thursday, its biggest one-day climb since
September. []
"As the year progresses, the dollar has continued to
strengthen but gold has picked up," said Barclays Capital
analyst Suki Cooper. "That is due to a combination of investor
interest starting to turn more favourable towards gold, and the
physical demand we're seeing in terms of fabrication."
Major gold markets are starting to buy more gold, with
Indian gold imports seen at 23-28 tonnes in March against 4.8
tonnes a year before, and Turkish imports at 370 kilograms so
far this year compared to zero in the same period of 2009.
"We are comparing data for India and Turkey to very weak
numbers in 2009, but the fact that that demand has emerged at
prices well above $1,000 an ounce is really positive for the
market," said Cooper.
Other precious metals also climbed, with silver <XAG=>
rising in gold's wake to 11-week highs at $18.40, and was later
bid at $18.39 an ounce against $18.04.
Platinum <XPT=> was at $1,717.50 an ounce versus $1,711.50,
while palladium <XPD=> was at $508.50 versus $501.50.
(Reporting by Jan Harvey; Editing by Sue Thomas)
