* Dollar rises but euro, stocks, commodities fall
* Main ETF holdings at record but Q3 gold demand seen weak
* Silver, platinum, palladium underperform gold
(Updates, adds comment, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, June 29 (Reuters) - Gold held near $1,235 an ounce
in Europe on Tuesday as persistent concerns over the euro zone
debt crisis supported safe-haven demand for the metal, but the
stronger dollar limited gains.
Spot gold <XAU=> was bid at $1,235.05 an ounce at 0919 GMT,
against $1,236.05 late in New York on Monday. U.S. gold futures
for August delivery <GCQ0> eased $2.30 an ounce to $1,236.30.
The precious metal rose back towards last week's record high
near $1,265 an ounce on Monday, reaching a peak of $1,262.45,
but corrected sharply in later trade.
"Both times gold reached $1,260 over the last week it has
been instantly hammered $30-35 lower," said Ole Hansen, senior
manager at Saxo Bank.
"The focus seems to have shifted back towards the strong
dollar/weak commodity relation. This has increased the risk for
a deeper correction," he added. "If support at $1,224 is broken
it could get a bit ugly."
The dollar <.DXY> rose against a basket of currencies on
Tuesday, while the euro slumped to a lifetime low against the
Swiss franc and a 1-1/2 year low versus sterling. []
The single currency was depressed by concerns over banks'
obligation to repay 442 billion euros on Thursday that they
borrowed a year ago at rock-bottom rates as part of the European
Central Bank's efforts to boost liquidity.
Appetite for nominally riskier assets was soft, with
European shares falling on Tuesday following a weak performance
among Asian stocks, which are on course for their worst
quarterly performance since the end of 2008. [] []
Commodity stocks led the fall in Europe, as oil and
industrial metals weakened. Copper fell nearly 4 percent, while
other base metals like zinc and lead slid even further. []
Oil fell as much as 1.7 percent to below $77 as the dollar
weakened and forecasts indicated tropical storm Alex would skirt
the main production region in the U.S. Gulf of Mexico. []
Gold is often traded as part of a basket of commodities, and
can be sensitive to moves in broader commodity prices.
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For a graphic showing commodities' relative price
performance this year, click on:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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SEASONALLY WEAK
Investment demand for physical gold remained a major support
for prices, with holdings of the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust <GLD>, still at
a record high 1,316.177 tonnes on Monday. []
But gold is entering a seasonally weak period for physical
demand which could undermine any push higher, analysts said.
"June-August are the months in which demand for gold
retreats," said Societe Generale in a note. "Along with the
onset of the vacation period in North America and Europe, the
Indian market slows significantly."
"The average difference in tonnage (consumption) between the
second and third quarters 2000-2008 was 41 tonnes," it added.
Other precious metals underperformed gold, with silver
<XAG=> easing to $18.50 an ounce against $18.68, platinum <XPT=>
to $1,546 an ounce against $1,565, and palladium <XPD=> to
$459.55 against $466.
Weakness in other commodities is weighing on the metals,
which are more industrial in use than gold. Platinum and
palladium are chiefly consumed by carmakers, while silver is
widely used in electronics manufacturing and in alloys.
(Editing by James Jukwey)
