* Dollar retreats, stocks slip as economic concerns weigh
* World Gold Council sees gold demand increasing in 2010
* First inflow seen into largest silver ETF since early July
(Updates throughout, previous SINGAPORE)
By Jan Harvey
LONDON, Aug 25 (Reuters) - Gold hit eight-week highs near
$1,240 an ounce in Europe on Wednesday as the dollar fell versus
the euro and as equities slipped on concerns over economic
growth, lifting interest in the metal as a safe store of value.
Spot gold <XAU=> was bid at $1,237.05 an ounce at 0910 GMT,
having earlier touched a high of $1,239.25 against $1,229.25
late in New York on Tuesday. U.S. gold futures for December
delivery <GCZ0> rose $5.50 an ounce to $1,238.90.
Gold priced in euros and sterling also hit multi-week highs.
The precious metal benefited from demand for a haven from
volatility in assets seen as higher risk, such as stocks and
industrial commodities.
"We could definitely see further price rises if the economy
proves not to be that robust," said Commerzbank analyst Daniel
Briesemann. He said rising demand for gold as an investment
product, as outlined in a World Gold Council report released on
Wednesday, suggested further support for prices.
"The seasonally stronger demand period is going to start
now," he said. "In India, for example, we should see rising
imports in gold until the end of the year due to the festival
season which started yesterday. That should help gold."
The WGC said in its quarterly demand trends report on
Wednesday that India and China were likely to provide the main
thrust to demand growth this year, and predicted investment
demand will stay strong. []
It reported burgeoning bullion investment in the second
quarter, notably from Europe, seat of the euro zone sovereign
debt crisis. Demand for gold exchange-traded funds quintupled in
the quarter, it said.
On the currency markets, the euro rose against the dollar on
Wednesday, extending gains after the German Ifo business
sentiment survey came in above forecasts. []
A weaker dollar usually translates into higher gold prices,
as it lifts the metal's appeal as an alternative investment and
makes dollar-priced assets cheaper for other currency holders.
Gold priced in euros <XAUEUR=R> hit its highest since July 1
at 976.63 euros an ounce and was later bid at 975.10 euros an
ounce against 973.59 euros. Sterling priced gold <XAUGBP=R>
reached its highest since mid July at 803.40 pounds, before
easing to 801.94 pounds from 797.96 pounds.
STOCKS DIP
European stocks were lower as investors continued to fret
over the outlook for global growth, while oil prices lifted from
seven-week lows as investors looked for relief in U.S. durable
goods orders later in the day. [] []
The VIX volatility index <.VIX>, often known as the "fear
index", rose to its highest since July 7 on Tuesday, a sign that
risk aversion is increasing.
"Volatility measures such as the VIX rose whilst credit
spreads widened," said Credit Agricole analysts in a note.
"The only positive thing to note in relation to the rise in
risk aversion is that it is taking place in an orderly manner,
with markets not panicking (yet)."
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For a graphic showing the relative prive performance of
various commodities this year, click on:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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Spot silver <XAG=> rose to $18.55 an ounce from $18.34,
extending gains after posting its biggest one-day rise in more
than three weeks on Tuesday on the back of a climb in gold
prices.
Holdings of the world's largest silver-backed ETF, New
York's iShares Silver Trust <SLV>, rose for the first time since
July 13 that day, climbing just over 24 tonnes to 9,175.38
tonnes. []
Platinum <XPT=> was at $1,518 an ounce against $1,510, while
palladium <XPD=> was at $485.50 against $482.50.
(Reporting by Jan Harvey; Editing by William Hardy)
