* Euro under pressure after Bernanke spooks currency market
* Stocks, commodities bounce back after losses
* SPDR ETF holdings rose more than 30 T to record
(Updates prices, adds comment)
By Jan Harvey
LONDON, May 26 (Reuters) - Gold rose more than 1 percent in
Europe on Wednesday as volatility in currency markets and fears
over the outlook for the euro prompted gold buying as a haven
from risk.
Interest in physical gold remained high, with holdings of
the world's largest gold-backed exchange-traded fund, New York's
SPDR Gold Trust <GLD>, rising more than 30 tonnes on Tuesday to
a record high 1,267.322 tonnes.
Spot gold <XAU=> was bid at $1,212.85 an ounce at 1107 GMT,
against $1,200.10 late in New York on Tuesday. U.S. gold futures
for June delivery <GCM0> on the COMEX division of the New York
Mercantile Exchange rose $15.30 to $1,213.30 an ounce.
Prices are recovering after falling 4.5 percent last week as
concern over the euro zone's sovereign debt crisis sparked
selling of assets seen as higher risk, like stocks and
commodities.
"Same old story for gold -- initially lower on commodity
liquidation as people need cash, and then up on (the view of)
gold as a currency investment," said Simon Weeks, head of
precious metals at the Bank of Nova Scotia.
"With strong ETF demand and the man on the street buying
gold coins in northern Europe, it's not surprising that we are
now higher."
Geopolitical concerns centred on the Korean peninsula, where
tensions are increasing, were also cited by some analysts as
supportive for gold. []
"At the moment, not only financial jitters but also
geopolitical concerns over what could be happening in Korea are
also (helping gold)," said Commerzbank analyst Eugen Weinberg.
The euro <EUR=> fell towards a four-year low versus the
dollar after Federal Reserve chairman Ben Bernanke highlighted
the possibility that its dollar funding facility would not last
forever, lifting risk aversion.
Speaking in Tokyo, Bernanke said dollar swap lines, which
were reinstated as the Greek debt crisis escalated, played an
important role in stabilising markets, but that the Fed did not
want to provide a permanent service. []
COMMODS, EQUITIES REBOUND
Commodity and equity markets rose, however, rebounding from
previous losses. European equities bounced back from nine-month
lows hit a day earlier, with investors returning to the market
to buy beaten-down stocks. [] []
Oil climbed nearly 3 percent after a report showing a drop
in U.S. gasoline stockpiles, while industrial metals like
copper, aluminium and zinc climbed. [] []
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For a graphic showing the price performance of various
commodities this year, click on:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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Gold is also picking up momentum as ETFs continue to buy
bullion. The 108-tonne inflow into the SPDR fund this month
alone is worth some $4.179 billion.
"Investors (are) seeking to protect themselves against
currency and sovereign default risks," VTB Capital analyst
Andrey Kryuchenkov said in a note.
Platinum <XPT=> was at $1,532.50 an ounce against $1,515.50,
while palladium <XPD=> was at $449.03 against $436. Spot silver
<XAG=> was bid at $18.25 an ounce against $17.86.
"We expect the volatile trade to continue short-term (in
platinum group metals) as fund/speculative players are still
sitting on substantial longs while investors have used the dips
to increase their exposure," said TheBullionDesk.com analyst
James Moore.
(Reporting by Jan Harvey; Editing by Sue Thomas)
