* Dollar strengthens as euro, stocks, commodities fall
* ETF holdings at record but Q3 gold demand seen weak
* Silver, platinum, palladium underperform gold
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, June 29 (Reuters) - Gold eased on Tuesday as sliding
stock markets and a strengthening dollar prompted selling of
commodities, though ongoing concerns over euro zone debt
supported safe-haven demand for the metal, limiting losses.
Equities dropped in Europe and the United States, extending
losses after weak U.S. June consumer confidence data. This
weighed heavily on assets like stocks, oil and base metals,
though gold, in comparison, remained relatively resilient.
Spot gold <XAU=> was bid at $1,232.70 an ounce at 1425 GMT,
against $1,236.05 late in New York on Monday. U.S. gold futures
for August delivery <GCQ0> eased $5.40 cents to $1,233.20.
VTB Capital analyst Andrey Kryuchenkov said while risk
aversion is still supporting gold, he expects the metal to
remain under pressure from the stronger dollar, losses in other
commodities and weakness in seasonal physical demand.
"Sentiment is still sour, but physical will not buy here,"
he said. "The upside is capped with the market being overly
long, and the U.S. dollar is set to remain more or less well
supported."
Gold, like other dollar-priced assets, typically weakens as
the U.S. currency firms. Early this year that relationship broke
down as both were lifted by risk aversion, but the usual link is
being re-established.
"I notice that in extreme cases of persistent flight to
safety, (gold and the dollar) trend together, but when matters
calm down and the greenback hold strong, gold corrects a little
with other metals," said Kryuchenkov.
The dollar rose against a basket of currencies on Tuesday,
while the euro hit a lifetime low against the Swiss franc and a
1-1/2 year low versus sterling amid concerns over the expiry of
a key euro zone refinancing program this week. []
Meanwhile oil prices fell more than 3 percent to below $76
per barrel as stock markets slumped and risk appetite dwindled
on renewed worries over euro zone debt, while base metals like
copper, lead and zinc slid more than 4 percent. [] []
The Reuters-Jeffries CRB index <.CRB>, a global commodities
benchmark, fell to a two-week low on Tuesday.
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For a graphic showing commodities' relative price
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http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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EQUITIES SLIDE
European shares slid to a near-three week low, while the S&P
500 and Dow Jones Industrial Average in New York fell more than
2 percent. [] []
Stocks are dropping on fresh concerns over fiscal problems
in the euro zone ahead of bank repayments to the European
Central Bank this week.
Investment demand for physical gold remained a 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 $18.44 an ounce against $18.68, platinum <XPT=>
to $1,535 an ounce against $1,565, and palladium <XPD=> to
$451.50 against $466.
(Editing by Alison Birrane)
