* 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: U.S. April nonfarm payrolls on Friday
(Recasts, updates prices, market activity, adds NEW YORK to
dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 6 (Reuters) - Gold rose toward $1,200
an ounce on Thursday as investors sought a safe haven from the
financial turmoil in Europe that has propelled bullion to its
biggest one-day percentage gain since early February.
Gold priced in euros <XAUEUR=R>, in Swiss francs <XAUCHF=R>
and in sterling <XAUGBP=R> all hit record highs, underlying the
metal's strength with rising currency volatility. Meanwhile,
strong investment interest boosted holdings of the biggest
gold-backed exchange-traded fund to an all-time peak.
In remarks after the European Central Bank 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.
"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.
Spot gold <XAU=> rose to $1,196.55 an ounce, its firmest
since Dec. 4 and its fourth rise in the last five trading
sessions. It was at $1,192.45 an ounce at 12:30 p.m. EDT (1630
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 NYMEX rose $18.90, or 1.6 percent, to $1,193.90
an ounce.
Loss of confidence in the euro-zone sovereign debt markets
and currencies has been benefiting gold in a flight to safety,
traders 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. []
Dollar strength usually weighs on gold, but this factor is,
for the moment, being outweighed by risk-related buying.
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For a graphic showing gold's correlation with the euro,
click on: http://link.reuters.com/tab92k
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Euro-priced gold <XAUEUR=R> hit a record high of 944.34
euros an ounce, while in Swiss francs <XAUCHF=R> and sterling
<XAUGBP=R> the metal also peaked at a record at 1,329.23 francs
an ounce and 804.84 pounds an ounce respectively.
Gold hit a record high of $1,226.10 last December.
RISK APPETITE GROWS
Euro zone states are currently finalizing 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. []
The more industrial precious metals -- silver, platinum and
palladium -- rebounded on Thursday after selling off with most
other commodities on Wednesday as risk aversion soared.
Platinum <XPT=> was at $1,658.50 an ounce, having earlier
climbed 3 percent to $1,682 an ounce against $1,625 on
Wednesday.
Meanwhile palladium <XPD=> was at $509 against $501.50 and
silver <XAG=> was at $17.48 an ounce versus $17.43.
Prices at 12:36 p.m. EDT (1636 GMT)
Last Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1192.60 17.60 1.5 1096.20 8.8
US silver <SIN0> 17.495 -0.039 -0.2 16.845 3.9
US platinum <PLN0> 1668.40 18.80 1.1 1471 13.4
US palladium <PAM0> 513.90 5.35 1.1 408.85 25.7
Gold <XAU=> 1191.45 17.25 1.5 1096.35 8.7
Silver <XAG=> 17.48 0.05 0.3 16.84 3.8
Platinum <XPT=> 1661.00 36.00 2.2 1465.50 13.3
Palladium <XPD=> 509.00 7.50 1.5 405.50 25.5
Gold Fix <XAUFIX=> 1185.25 7.25 0.6 1104 7.4
Silver Fix <XAGFIX=> 17.69 6.00 0.3 16.99 4.1
Platinum Fix <XPTFIX=> 1662.00 4.00 0.2 1466 13.4
Palladium Fix <XPDFIX=> 507.00 0.00 0.0 402 26.1
(Reporting by Frank Tang and Jan Harvey; Editing by Lisa
Shumaker)
