* Concern over risk contagion hits euro, commodities
* Bullion hits record in euros, sterling, Swiss francs
* SPDR gold ETF holdings hit record 1,166 T
(Updates prices, adds comment)
By Jan Harvey
LONDON, May 6 (Reuters) - Gold rose towards $1,185 an ounce
on Thursday and held near record highs in euro terms on fears
Greece's debt issues may spread, with cautious comments from the
European Central Bank doing little to temper risk aversion.
In remarks after the ECB left interest rates at 1.0 percent,
its chief Jean-Claude Trichet ruled out a Greek default, but
added officials did not discuss buying government bonds to cut
euro zone members' borrowing costs.
Spot gold <XAU=> was bid at $1,184.80 an ounce at 1404 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 $10.20 to $1,185.20 an ounce.
"Despite the ECB, being confident that default for Greece is
'out of question', the market seems to be nervous," said Pradeep
Unni, senior analyst at Richcomm Global Services.
"At this point in time, it is becoming evident that
investors are hedging the recent euro zone and UK crisis equally
in gold and the U.S. dollar," he said.
The premium investors demand to hold 10-year euro zone
peripheral government bonds rather than benchmark Bunds rose
after Trichet said buying bonds to combat the credit crisis had
not been discussed at a rate-setting meeting. []
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 930.22
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 787.93 pounds an ounce respectively.
APPETITE GROWS
Euro zone states are currently finalising details of a 110
billion euro aid package for Greece, which 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."
Investment demand for bullion has been 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. []
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 -- recovered losses on Thursday after selling off with
most other commodities on Wednesday as risk aversion soared.
Platinum <XPT=> was bid at $1,659.50 an ounce, having
earlier climbed 3 percent to $1,682 an ounce against $1,625 on
Wednesday 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 $509 against $501.50 and
silver <XAG=> was at $17.58 an ounce versus $17.43.
(Editing by Sue Thomas)
