* Flight to safety, uncertainty lift gold from 1-week lows
* Gold, currencies correlation weakens due to euro woes
* Silver, platinum, palladium tumble on demand worries
* Silver, PGMs see biggest 2-day loss since Feb
* Coming up: U.S. April nonfarm payrolls on Friday
(Recasts, adds comments, graphic, updates prices to market
close, changes dateline, previous LONDON)
By Frank Tang
NEW YORK, May 5 (Reuters) - Gold rebounded from one-week
lows on Wednesday, as risks that a euro-zone debt crisis may
spread beyond Greece fueled a flight to safety in the wake of
currencies volatilities and equities losses.
Precious metals with strong industrial demand components
including silver, platinum and palladium all posted their
biggest two-day losses since early February due to fears about
a global economic slowdown sparked by possible sovereign debt
defaults.
"The market is so uneasy right now because the news coming
out of the European Union continues to be contradictory. People
are moving from the fiat currencies into the hard safe-haven
asset which is gold," Michael Daly, gold specialist at futures
broker PFGBest.
The usual positive correlation between gold and euro is
showing signs of breaking down in the past two weeks, as the
single currency has plummeted 5 percent to below $1.29 for the
first time in more than a year. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic showing the correlation between gold and
euro, click:
http://link.reuters.com/cun72k
For a graphic on 2010 commodity price performance, click:
http://link.reuters.com/hun72k
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Daly said that the correlation would remain weak as long as
the euro situation remained unstable.
Spot gold <XAU=> was at $1,173.35 an ounce at 2:27 p.m. EDT
(1827 GMT) against $1,170.65 late in New York on Tuesday. U.S.
June gold futures <GCM0> on the COMEX division of the NYMEX
settled up at $5.80 at $1,175 an ounce.
Protests against the Greek government austerity measures in
Athens killed three people, while credit agency Moody's said
Portugal was on review for a possible downgrade.
[] []
Money markets in Europe are showing signs of strain as
fears of contagion from the Greek crisis renew worries about
the banking system's health but the current chill is far from
the interbank freeze at the height of the credit crunch.
[]
"We think the flight to safety will continue, and we expect
to see more inflows into physical gold products like
exchange-traded funds," said Commerzbank analyst Daniel
Briesemann.
Investment interest held firm, with holdings of the world's
largest gold-backed exchange-traded fund, New York's SPDR Gold
Trust <GLD>, still at a record high on Tuesday.
"Gold is actually holding up remarkably well in the face of
what is a very strong dollar move against the euro," said RBS
analyst Daniel Major. "The market as a whole is running scared,
and it is safe-haven buying that is supporting gold."
Gold's underlying strength can be seen by its rallies
against non-U.S. currencies. The metal rose to all-time highs
in euro <XAUEUR=R> and Swiss Francs terms <XAUCHF=R> on
Wednesday.
Gold hit a record high of $1,226.10 last December.
DEMAND WORRIES HIT SILVER, PGM
The more industrial precious metals -- silver, platinum and
palladium -- slipped sharply in line with losses in other
commodities on fears that a widening debt crisis could trigger
global economic slowdown.
Palladium <XPD=> fell as much as 6 percent to its session
low of $480 an ounce, its weakest level since April 1, and was
later at $503.50 against $515.50.
Platinum <XPT=> hit its weakest since March 31 at $1,618.50
and was later at $1,641 an ounce versus $1,668.50. Silver
<XAG=> fell to its lowest since late March at $17.05, and was
later at $17.42 an ounce against $17.84.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1175.00 5.8 0.5 1096.20 7.2
US silver <SIK0> 17.511 -0.307 -1.7 16.845 4.0
US platinum <PLN0> 1649.60 -36.20 -2.1 1471.00 12.1
US palladium <PAM0> 508.55 -6.70 -1.3 408.85 24.4
Prices at 2:27 p.m. EDT (1827 GMT)
Gold <XAU=> 1173.35 2.70 0.2 1096.35 7.0
Silver <XAG=> 17.46 -0.38 -2.1 16.84 3.7
Platinum <XPT=> 1644.50 -24.00 -1.4 1465.50 12.2
Palladium <XPD=> 505.00 -10.500 -2.0 405.50 24.5
Gold Fix <XAUFIX=> 1165.00 -7.00 -0.6 1104 5.5
Silver Fix <XAGFIX=> 17.63 -108.00 -5.8 16.99 3.8
Platinum Fix <XPTFIX=> 1636.00 29.00 1.7 1466 11.6
Palladium Fix<XPDFIX=> 493.00 17.00 3.3 402 22.6
(Additional reporting by Jan Harvey, Michael Taylor and
Pratima Desai in London; Editing by Lisa Shumaker)
