* Gold takes breather after rally; risk aversion persists
* SPDR holdings hit record 1,209.499 tonnes as of May 12
* Gold priced in sterling, euro hit record highs
* Coming up: U.S. April retail sales data
(Recasts, updates prices, market activity; adds NEW YORK
byline/dateline)
By Frank Tang and Pratima Desai
NEW YORK/LONDON, May 13 (Reuters) - Gold prices were nearly
flat on Thursday as the market took a breather after the metal
raced to two consecutive record highs, but economic jitters
over a $1 trillion European rescue plan supported prices.
Even with Thursday's market pause, gold's rally in dollar
terms now stands at 7 percent from a week ago. Worries about
the European rescue plan also sent gold priced in euros and
sterling to record highs.
Silver and platinum group metals were also unchanged as
choppy currency and equity markets showed signs of stabilizing.
U.S. stock markets steadied after volatility soared in the last
several sessions.
Michael Daly, gold specialist at Chicago-based futures
broker PFGBest, said overnight profit-taking weighed on gold.
But, he added, economic uncertainties and the upcoming Indian
festival of Akshaya Tritiya, a major gold-buying event, should
support prices.
"There is a lot of uneasiness with the European Union and
investors are weary right now. If central banks continue to
print money at this rate, there will be inflation to follow and
I think people are protecting their wealth" by buying gold,
Daly said.
Spot gold <XAU=> was at $1,232.75 an ounce at 2:58 p.m. EDT
(1858 GMT), nearly flat from $1,236.35 an ounce late in New
York on Wednesday, when it hit a record $1,248.15 on fears that
the massive European rescue package will not solve the euro
zone debt crisis.
U.S. gold futures <GCM0> settled down $13.90, or 1.1
percent, at $1,229.20 an ounce.
Demand for both physical and paper gold investment was
strong, with sales of coins, bars and exchange-traded gold
funds soaring, and open interest in U.S. futures inching closer
to a record high.
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For a graphic showing COMEX open interest, click:
http://link.reuters.com/xuj93k
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"The bullish overtone in the market has reached an all-time
high," said Scott Meyers, senior futures analyst with Pioneer
Futures in New York, referring to the hike in open interest.
"There doesn't seem to be any limit to where this market
can go. There are a plethora of things from geopolitical
tensions to uncertain market conditions for investors to point
to hard tangible assets like gold."
Investors use gold as a hedge against financial and
political turbulence and as a store of value during times of
high inflation, which erodes wealth.
Loose monetary policy, a focus on growth and some concern
that governments could use inflation to devalue their debt and
their currencies to boost economic activity is another reason
cited for gold's popularity. []
BONDS BUYBACKS HURT GOLD
One element of the rescue has pressured gold prices,
however. The European Central Bank's commitment to buy euro
zone government bonds has cut chances of defaults.
[]
But analysts say risk aversion still dominates market
psychology, noting that gold has moved up alongside the dollar.
<EUR=> <.DXY>.
"I think we could easily see a new record high before the
weekend," analyst Walter De Wet at Standard Bank said,
referring to the spot gold price. "But also ...at these levels
smaller than usual volumes could push prices higher."
Worries about the European rescue plan sent gold priced in
euros and sterling to record highs. Gold priced in sterling
<XAUGBP=R> rose to a record 848.97 pounds an ounce, while
euro-priced gold <XAUEUR=R> touched an all-time high of 989.20
euros. []
Strong investor interest in gold can be seen in the
holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust <GLD>, which said its holdings stood at a
record 1,209.499 tonnes as of May 12.
Spot silver <XAG=> was at $19.47 an ounce, from $19.48 on
Wednesday, platinum <XPT=> was at $1,734 from $1,736.50 and
palladium <XPD=> at $539 from $540.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1229.20 -13.9 -1.1 1096.20 12.1
US silver <SIN0> 19.499 -0.164 -0.8 16.845 15.8
US platinum <PLN0> 1739.40 -7.90 -0.5 1471.00 18.2
US palladium <PAM0> 543.30 -4.15 -0.8 408.85 32.9
Prices at 2:56 p.m. EDT (1856 GMT)
Gold <XAU=> 1232.85 -3.50 -0.3 1096.35 12.5
Silver <XAG=> 19.47 -0.01 -0.1 16.84 15.6
Platinum <XPT=> 1733.50 -3.00 -0.2 1465.50 18.3
Palladium <XPD=> 539.50 -0.500 -0.1 405.50 33.0
Gold Fix <XAUFIX=> 1237.50 2.50 0.2 1104 12.1
Silver Fix <XAGFIX=> 19.43 -16.00 -0.8 16.99 14.4
Platinum Fix <XPTFIX=> 1728.00 3.00 0.2 1466 17.9
Palladium Fix<XPDFIX=> 543.00 1.00 0.2 402 35.1
(Additional reporting by Humeyra Pamuk and Pratima Desai in
London; Editing by David Gregorio and Walter Bagley)
