* Concern over risk contagion hits euro, commodities
* Bullion hits record in euros, sterling, Swiss francs
* SPDR gold ETF holdings hit record 1,166 T
* Coming up: ECB press conference at 1230 GMT
(Updates prices, adds comment)
By Jan Harvey
LONDON, May 6 (Reuters) - Gold rose nearly 1 percent towards
$1,185 an ounce in Europe on Thursday and hit record highs in
euros, sterling and Swiss francs as investors worried Greece's
debt problems could spread elsewhere in the euro zone.
Gold is becoming increasingly attractive as a hedge against
sovereign risk and the resulting volatility in the foreign
exchange markets, analysts said. Elsewhere, platinum climbed 3
percent as lower prices tempted funds back to the metal.
Spot gold <XAU=> was bid at $1,184.11 an ounce at 1051 GMT,
versus $1,174.20 late in New York on Wednesday. U.S. gold
futures for June delivery <GCM0> on the COMEX division of the
New York Mercantile Exchange rose $10.00 to $1,185.00 an ounce.
Investment demand for bullion was strong, with the world's
largest gold-backed exchange-traded fund, New York's SPDR Gold
Trust <GLD>, reporting a 7-tonne rise in its holdings to a
record 1,166.002 tonnes on Wednesday. []
"People are concerned about sovereign credit risk and this
is going to stay around for some time. This type of risk is not
solved in a week, or a month," said Standard Bank analyst Walter
de Wet. "Gold has performed very well, and it is going to
continue to perform well if things get worse."
He said, however, that persistent strength in the dollar,
weakness in jewellery demand and the weight of scrap returning
to the market are likely to cap gold's gains in the longer term.
Escalating concerns that Greece's debt crisis may spill over
into other euro zone states knocked the euro to a 14-month low
against the dollar on Thursday. European leaders warned on
Wednesday that debt problems may spread. []
Dollar strength usually weighs on gold, but this factor is,
for the moment, being outweighed by risk-related buying.
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Euro-priced gold <XAUEUR=R> hit a record high of 926.34
euros an ounce, while in Swiss francs <XAUCHF=R> and sterling
<XAUGBP=R> the metal also peaked at a record at 1,319.79 francs
an ounce and 786.33 pounds an ounce respectively.
APPETITE GROWS
Euro zone states are currently finalising details of a 110
billion euro aid package for Greece, whichi is struggling to
implement the austerity measures attached to the aid.
"Growing sovereign risk is lifting our appetite for gold,"
said Morgan Stanley in a note. "Although gold has already
rallied, trading at its highest in 2010, and reaching nominal
highs in euros, we see further upside from current levels."
All eyes are now on the ECB, which will announce the outcome
of its latest montary policy meeting at 1145 GMT. The bank is
expected to hold rates at record lows, after which ECB chief
Jean-Claude Trichet will hold a news conference at 1230 GMT.
The bank will be under pressure to show it can stop the
Greek debt crisis from engulfing other euro zone member states.
[]
Other commodities also steadied after earlier being battered
by fears over euro zone contagion risks. Oil slid to a six-week
low below $80 a barrel in early trade and copper was down some 2
percent at its low. [] []
The more industrial precious metals -- silver, platinum and
palladium -- steadied on Thursday after selling off with most
other commodities on Wednesday as risk aversion soared.
Platinum <XPT=> climbed to $1,676.50 an ounce from $1,625,
up 3 percent, as it recovered from its lowest since late March.
David Wilson, an analyst at Societe Generale, said he had
heard reports of fund buying of the white metal. "Stock markets
have recovered somewhat this morning, so maybe we are finding
some stability in investor sentiment," he said.
Meanwhile palladium <XPD=> was at $511 against $501.50 and
silver <XAG=> was at $17.67 an ounce versus $17.43.
(Reporting by Jan Harvey; Editing by Amanda Cooper)
