* Moody's downgrade of Greece lifts risk aversion
* SPDR gold ETF holdings stay at record above 1,306 T
* Gold-silver ratio drops to two-week low
(Updates, adds comment, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, June 15 (Reuters) - Gold firmed in Europe on Monday
as a ratings downgrade of Greece reawakened fears of a worsening
fiscal crisis, raising interest in the metal as a haven and
knocking appetite for nominally higher-risk assets like stocks.
Spot gold <XAU=> was bid at $1,222.00 an ounce at 0940 GMT,
against $1,220.15 late in New York on Monday. U.S. gold futures
for August delivery <GCQ0> eased 80 cents to $1,223.70.
While analysts said Moody's downgrade of Greece's government
bond ratings into junk territory was expected, it reminded
investors that Europe's debt crisis was not over. []
"There is every reason to think gold is going to continue to
be supported by this general nervousness over Europe and, much
further out, the issue of dislocation created by fiscal stimulus
plans," said Societe Generale analyst David Wilson.
"Our forecast is that we will still see new highs in the
second half of the year," he added. Gold's current record high
is $1,251.20 an ounce, set last week.
The euro <EUR=> retreated on Tuesday as the Greek downgrade
cut short a rally in the currency. Gold has adopted an unusual
negative correlation with the euro recently as it acts as a
hedge against weakness in the single currency. []
European shares also snapped a four-session rally to decline
on Tuesday, tracking losses in Asia as attention shifted back to
the euro zone's finances. [] []
The cost of insuring against a default by peripheral euro
zone government bond issuers rose on Tuesday as Moody's
downgrade of Greece refocused market attention on the euro zone
debt crisis. []
The markets are now looking ahead to a spate of U.S. data
due out later in the session, including May import/export prices
and the Empire State manufacturing survey at 1230 GMT. If this
beats consensus, better risk appetite could hurt gold.
PHYSICAL DEMAND IMPROVES
Physical demand for the precious metal firmed a touch in
Asia as prices slipped from record highs. Sales of scrap in the
world's number one consumer, India, subsided although domestic
prices were within site of record levels. []
Firm demand for physical bullion from investors also kept
holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, at record highs above
1,306 tonnes on Monday.
From a technical perspective, the outlook for the precious
metal is positive, said analysts who study charts of past price
movements to determine the future direction of trade.
"The metal spent the last three days consolidating between
$1,215 and $1,238, and probability now lies with the bullish
trend for another attempt on its record high," said
ScotiaMocatta in a note.
Among other precious metals, silver <XAG=> tracked gold
higher to $18.31 an ounce against $18.16.
The ratio of gold to silver -- how many ounces of silver are
needed to buy an ounce of gold -- fell to a two-week low on
Tuesday at 66.73, showing the metal is becoming increasingly
expensive compared to gold.
Platinum <XPT=> was at $1,550 an ounce against $1,557, while
palladium <XPD=> was at $452.33 against $455.50, declining in
line with other industrial metals.
Morgan Stanley upgraded the U.S. auto industry to
"attractive" from "in-line" and said it sees higher levels of
sustainable profitability for the sector, driven by
restructuring, capacity rationalization and higher utilization.
[]
(Reporting by Jan Harvey; Editing by Sue Thomas)
