* Gold hits record highs in euros, sterling, Swiss francs
* Concern over outlook for Greece persists in euro zone
* Investors worry debt issues will spread to other countries
(Updates prices, adds comment, detail)
By Jan Harvey and Rebekah Curtis
LONDON, May 4 (Reuters) - Gold prices retreated on Tuesday
from five-month highs above $1,190 hit earlier in the day, as
its safe-haven status was dented by Spain's dismissal of rumours
the country needed 280 billion euros ($372.9 billion) of aid.
An earlier gold rally had lifted prices of the metal to
record peaks in euro terms <XAUEUR=R>, sterling <XAUGBP=R> and
Swiss francs <XAUCHF=R>.
Spot gold <XAU=> fell to a session low of $1,168.25 an
ounce, versus its day's peak of $1,191.90 an ounce. It bid at
$1,172.55 an ounce at 1521 GMT, against $1,181.40 late in New
York on Monday.
Spanish Prime Minister Jose Luis Rodriguez Zapatero on
Tuesday dismissed as "complete madness" a market rumour that his
country would soon ask for 280 billion euros in aid from the
euro zone. []
Investors had piled into gold earlier on concerns a 110
billion euro bailout for debt-laden Greece may not suffice to
resolve its financial crisis, and that other euro zone economies
like Spain may also be hit by debt problems.
"The market got too friendly towards gold," said Afshin
Nabavi, head of trading at MKS Finance. "Some profit taking
started coming in," he added.
"We have broken quite important levels. $1,175 was a good
support and it went though it quite easily."
Stoking the earlier rally, the premium investors demand to
hold peripheral euro zone government bonds and the cost of
insuring against defaults rose on worries over Greece's bailout
plan and fears of contagion to other issuers. []
Japanese yen-priced gold <XAUJPY=R> reached its highest in
27 years, according to Reuters data, while gold priced in
Canadian <XAUCAD=R> and Australian dollars <XAUAUD=R> and South
African rand <XAUZAR=R> hit its highest since December.
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ALTERNATIVE CURRENCY
"Gold's (varied) roles as a commodity, an alternative
currency and a safe-haven asset are pulling more in the same
direction than they have all year," said UBS in a note.
"We would look for a test of December's record high of
$1,226.44 so long as the threat of sovereign aftershocks in the
euro zone persists."
U.S. gold futures for June delivery <GCM0> on the COMEX
division of the New York Mercantile Exchange fell $10.5 to
$1,172.8 an ounce.
The metal largely shrugged off gains in the dollar. The euro
slipped more than 1 percent versus the U.S. currency as concern
grew over whether the Greek aid package will work. []
The dollar also climbed against a basket of six currencies
after U.S. data showed factories running at their fastest pace
in nearly six years on Monday.
Other precious metals, which are more industrial in use than
gold, also declined and tracked losses in base metals and other
industrial commodities like crude oil.
Silver prices <XAG=> were at $17.99 an ounce against $18.77.
Platinum <XPT=> was at $1,676.50 an ounce against $1,720, while
palladium <XPD=> was at $514.50 against $539.
The platinum group metals are particularly exposed to the
recovery in the global automobile sector, as carmakers account
for more than half of demand for the autocatalyst materials.
Data showed U.S. auto sales rose about 20 percent in April
from recession-stunted results a year earlier, reflecting a
still-gradual recovery in the economy. The figures were not as
robust as some had hoped. []
(Editing by James Jukwey)
