* China's move to unpeg yuan from dollar boosts commods
* Dollar weakens after China move, hits 1-mth low vs euro
* Net long positions in platinum, palladium futures rise
(Updates throughout with comment, prices)
By Amanda Cooper
LONDON, June 21 (Reuters) - Gold prices eased off Monday's
record highs in afternoon trade in Europe, as investors took
profits, but analysts said persistent concern over sovereign
risk would make any declines short-lived.
China's decision to relax the yuan's peg to the U.S. dollar
to allow for greater flexibility in its exchange rate dented the
U.S. currency and lifted higher-risk assets, which in turn
undermined gold.
Spot gold <XAU=> was bid at $1,252.15 an ounce at 1425 GMT,
against $1,255.35 late in New York on Friday. U.S. gold futures
for August delivery <GCQ0> eased $4.50 to $1,254.00.
"As long as doubts persist about the success of resolving
the debt crisis in Europe, investors are still trying to protect
their investments with gold and that should give gold continued
support," said Commerzbank commodities analyst Daniel
Briesemann. "The decline we've seen this afternoon should be
short-lived."
Gold prices have risen more than 15 percent this year as
rising concerns over sovereign debt levels in Europe and the
prospect of further financial market instability has boosted
interest in the precious metal as a haven from risk.
Holdings of gold in the world's largest gold-backed exchange
-traded fund, SPDR Gold Trust, hit a record of 1,307.963 tonnes
as of June 17, while open interest in COMEX gold futures rose
last week to near all-time peaks as investors rushed to snap up
bullion.
Gold's long-running inverse relationship with the dollar
eroded as risk aversion has encouraged buying of both assets,
but a slide in the U.S. currency on Monday is now adding further
impetus to gold's run higher, analysts said.
"Dollar strength can help gold, and dollar weakness can help
gold as well," said Michael Lewis, head of commodities research
at Deutsche Bank.
"Central banks globally do have quite high dollar reserves
and the idea that they may now in aggregate be buying gold is an
interesting signal of the message that sends on their U.S.
dollar holdings, that they are probably overweight."
The World Gold Council released data that showed global
central bank gold reserves rose by 276.3 tonnes in the first
quarter of this year to 30,462.8 tonnes, with Saudi Arabia more
than doubling its reported holdings. []
Gold priced in currencies other than the dollar remained
below recent record highs on Monday.
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currencies, click on:
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The euro <EUR=> hit its highest levels in about a month
versus the dollar on Monday after China's decision on the yuan.
[]
Global equities rose and safe-haven U.S. Treasuries came
under pressure after China's pledge to give its currency new
room to move would ease political tensions with the West and
encourage investors to snap up riskier assets. []
Other commodities also rallied with copper and zinc prices
rising more than 3 percent and oil up more than $1 a barrel to
above $78. Analysts are betting that Chinese imports of key
commodities may rise. [] []
Strength in industrial metals lifted silver, platinum and
palladium. Silver <XAG=> was bid at $19.17 an ounce against
$19.10, having earlier hit its highest since May 17 at $19.53.
Platinum <XPT=> was at $1,605.00 an ounce against $1,585.50,
having earlier hit its highest since May 20 at $1,606.50 while
palladium <XPD=> was at $499.50 against $487.50. Earlier the
autocatalyst metal hit a four-week high at $501.
Speculators in New York platinum and palladium futures
lifted their net long positions in the metals last week, with
open interest in NYMEX palladium futures staging its largest
weekly rise since late March.
Both metals may be supported by increased flexibility in the
yuan exchange rate, said UBS analyst Edel Tully in a note.
"Platinum and palladium... stand to benefit from becoming
cheaper in local terms," she said. "China is an important
consumer of palladium in particular for auto production, so yuan
appreciation should boost (platinum group metals) demand."
(Additional reporting by Jan Harvey)
(Editing by Anthony Barker)
