* Gold rises to 3-week high above $1,230/oz
* European shares, euro extend losses midafternoon
* SPDR gold ETF holdings retreat from record
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, June 7 (Reuters) - Gold erased early losses on
Monday and rallied to a three-week peak of $1,233.75 an ounce as
investors took advantage of the dip in prices to buy the metal
as a haven from risk in other markets.
Spot gold <XAU=> was bid at $1,230.95 an ounce at 1512 GMT,
against $1,218.00 late in New York on Friday. U.S. gold futures
for August delivery <GCQ0> rose $16.00 to $1,233.70.
"This morning, day traders took a view that we would
probably see gold down below $1,200, where they could run a few
stops and pick it up cheaper," said Peter Hillyard, head of
metals sales at ANZ Bank. "I think they got caught (out)."
"The market is on a longer-term and sustainable uptrend," he
added. "If you detach yourself from the minute by minute, this
market is heading higher."
Gold has been lifted by volatility in the wider financial
markets this year, benefiting particularly from fears over euro
zone sovereign debt levels, which have battered the euro.
The euro <EUR=> tumbled to a four-year low versus the dollar
on Monday, breaking below $1.19. European shares were down 1
percent by midafternoon. [] []
U.S. stocks also erased early gains to turn negative. []
Meanwhile the 10-year German Bund yield hit a record low on
Monday as worries grew that fiscal problems in Hungary may
worsen the European debt crisis. []
The euro's slide helped euro-priced gold <XAUEUR=R> hit a
record 1,034.36 euros an ounce on Monday. Euro gold prices have
risen 35 percent so far this year.
The single currency is down more than 16 percent this year
versus the dollar on concerns about government debt. A strong
dollar usually pressures gold, but the relationship has weakened
as both are being purchased to protect against risk.
OTHER COMMODITIES PARE LOSSES
Other commodities slipped, with oil down 0.6 percent to near
$71 a barrel and industrial metals such as copper, lead and tin
falling. [] []
In investment news, holdings of the world's largest
gold-backed exchange-traded fund, New York's SPDR Gold Trust
<GLD>, eased a touch on Friday to 1,286.359 tonnes from a record
1,289.839 tonnes the previous day. []
At the same time holdings of the biggest silver-backed ETF,
the iShares Silver Trust <SLV>, fell more than 45 tonnes to
9,208.83 tonnes.
On Monday spot silver <XAG=> rose to $17.64 an ounce from
late Friday's level of $17.35.
"From a fundamental perspective, silver's price performance
was detached from its underlying supply and demand dynamics last
year, and instead robust investor interest led the metal to
outperform gold," said Barclays Capital in a weekly note.
"This year, we expect fabrication demand growth to outpace
supply growth; however, we also expect the market to remain in a
sizeable surplus, thereby once again exposing the price outlook
heavily to investor appetite."
Elsewhere platinum <XPT=> was at $1,504 an ounce against
$1,510, and palladium <XPD=> was at $421.53 against $423.75,
both caught up in selling of other industrial metals.
(Reporting by Jan Harvey; Editing by Jane Baird)
