* Gold rebounds as safe haven during stock-market rout
* ETF holdings at record but Q3 gold demand seen weak
* Silver, platinum, palladium underperform gold
* Coming up: U.S. ADP employment data on Wednesday
(Recasts, adds comment, updates prices, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, June 29 (Reuters) - Gold rebounded on Tuesday as
a global rout in equities and sharply lower commodities
prompted investors to pile in amid renewed fears about European
credit contagion.
Fears of a potential liquidity shortfall of more than 100
billion euros in the financial system as European banks repay
442 billion euros ($545.5 billion) in emergency loans sparked
the latest sell-off in equity markets, with the Dow losing
about 250 points. []
"The longer the stock market stays lower, and with all the
commodities trading weaker, investors who initially just sat
around are now buying gold in a flight to quality," said Adam
Klopfenstein, senior market strategist at MF Global's unit
Lind-Waldock.
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Graphic-commodities' relative price performance:
http://link.reuters.com/hun72k
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Analysts said risk-averse sentiment benefitted investments
perceived as safer during uncertainty, including U.S. two-year
Treasury notes whose yields fell to the lowest level on record.
[]
Spot gold <XAU=> was at $1,243.20 an ounce at 12:27 p.m.
EDT (1627 GMT), against $1,236.05 late in New York on Monday.
U.S. gold futures for August delivery <GCQ0> rose $5.60 cents
to $1,244.20.
Weak U.S. June consumer confidence data fueled the stock
market slump. This weighed heavily on assets like stocks, oil
and base metals, though gold, in comparison, remained
relatively resilient. []
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.
"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 holds strong, gold corrects a
little with other metals," said Kryuchenkov.
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.
The dollar rose sharply against a basket of currencies
<.DXY> on Tuesday, while the euro hit a lifetime low against
the Swiss franc and an 8-1/2 year low against the yen due to
fears 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 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-Jefferies CRB index <.CRB>, a global
commodities benchmark, fell to a two-week low on Tuesday.
SEASONALLY WEAK PERIOD
Investment demand for physical gold continued to support
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 $18.58 an ounce against $18.68, platinum
<XPT=> to $1,548.50 an ounce against $1,565, and palladium
<XPD=> to $457 against $466.
($1=.8194 Euro)
Prices at 12:43 p.m. EDT (1643 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCQ0> 1244.00 5.40 0.4% 13.5%
US silver <SIN0> 18.560 -0.118 -0.6% 10.2%
US platinum <PLN0> 1549.90 -15.70 -1.0% 5.4%
US palladium <PAU0> 459.25 -13.20 -2.8% 12.3%
Gold <XAU=> 1242.95 6.90 0.6% 13.4%
Silver <XAG=> 18.56 -0.12 -0.6% 10.2%
Platinum <XPT=> 1550.00 -15.00 -1.0% 5.8%
Palladium <XPD=> 455.05 -10.95 -2.3% 12.2%
Gold Fix <XAUFIX=> 1234.50 -1.50 -0.1% 11.8%
Silver Fix <XAGFIX=> 18.57 -54.00 -2.8% 9.3%
Platinum Fix <XPTFIX=> 1545.00 3.00 0.2% 5.4%
Palladium Fix <XPDFIX=> 463.00 3.00 0.7% 15.2%
(Additional reporting by Jan Harvey in London; editing by Jim
Marshall)
