* Global stocks tumble as sovereign credit risk worsens
* Investors sell gold to raise cash to cover losses
* Gold hits record highs in euros, sterling, Swiss francs
* Coming up: U.S. April nonfarm payrolls on Friday
(Recasts, updates prices, market activity; adds second
byline, dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 4 (Reuters) - Gold prices tumbled on
Tuesday after hitting five-month highs above $1,190 in earlier
trading, as investors sold bullion to raise cash amid a global
equities sell-off.
Silver, platinum and palladium all posted their biggest
one-day losses since February on fears the financial rescue
package for Greece might not be enough to contain a sovereign
debt crisis. The S&P 500 stock index <.SPX> tumbled 2.5
percent.
"You have worries today that this contagion is extending
much longer than everybody thought would be possible. When that
happens, you sell what you have and you sell what you can,"
said Zachary Oxman, managing director of California-based
TrendMax Futures.
"You are seeing a lot of funds selling a lot of inventory,
trying to raise cash and getting themselves away from risks."
An earlier gold rally on safe-haven demand had lifted
prices of the metal to record peaks in euro terms <XAUEUR=R>,
sterling <XAUGBP=R> and Swiss francs <XAUCHF=R>.
However, gold's rise ran out of steam after Spain's
dismissal of rumors that the country needed 280 billion euros
($372.9 billion) of aid, traders said. []
Spot gold <XAU=> hit a session low of $1,166.66 an ounce,
versus its day's peak of $1,191.90 an ounce -- highest since
Dec. 4. It was at $1,167.75 an ounce at 1:30 p.m. EDT (1530
GMT), against $1,181.40 late in New York on Monday.
U.S. gold futures for June delivery <GCM0> on the COMEX
division of the NYMEX settled down $14.10, or 1.2 percent, at
$1,169.20 an ounce.
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. []
GOLD AS ALTERNATIVE CURRENCY
Gold's underlying strength can be seen by its rallies
against non- U.S. currencies.
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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For a graphic showing gold's performance in currencies
other than the U.S. dollar, click on:
http://graphics.thomsonreuters.com/10/GLD_CRRJH0510.gif
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"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.
Gold was pressured as the dollar rose sharply against a
basket of six currencies <.DXY> after U.S. data on Monday
showed factories running at their fastest pace in nearly six
years.
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 $17.88 an ounce against
$18.77. Platinum <XPT=> was at $1,677.50 an ounce against
$1,720, while palladium <XPD=> was at $513.50 against $539.
PGMs fell sharply even as 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.
[]
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1169.20 -14.1 -1.2 1096.20 6.7
US silver <SIK0> 17.818 -0.995 -5.3 16.845 5.8
US platinum <PLN0> 1685.80 -43.10 -2.5 1471.00 14.6
US palladium <PAM0> 515.25 -33.00 -6.0 408.85 26.0
Prices at 1:58 p.m. EDT (1758 GMT)
Gold <XAU=> 1170.95 -10.45 -0.9 1096.35 6.8
Silver <XAG=> 17.91 -0.86 -4.6 16.84 6.4
Platinum <XPT=> 1677.50 -42.50 -2.5 1465.50 14.5
Palladium <XPD=> 517.50 -21.500 -4.0 405.50 27.6
Gold Fix <XAUFIX=> 1185.00 0.75 0.1 1104 7.3
Silver Fix <XAGFIX=> 18.71 9.00 0.5 16.99 10.1
Platinum Fix <XPTFIX=> 1712.00 8.00 0.5 1466 16.8
Palladium Fix<XPDFIX=> 529.00 11.00 2.0 402 31.6
(Additional reporting by Rebekah Curtis in London; Editing by
David Gregorio)
