* Jitters over euro zone debt continue to underpin gold
* SPDR gold ETF holdings surge by most since Feb. 2009
* Sterling-priced gold hits record, UK hung parliament eyed
(Updates prices)
By Jan Harvey
LONDON, May 7 (Reuters) - Gold held near $1,200 an ounce in
choppy trade on Friday, retreating from the previous session's
five-month highs as investors cashed in gains but supported by
haven buying amid persistent jitters over euro zone debt levels.
Spot gold <XAU=> was bid at $1,200.65 an ounce at 1540 GMT,
against $1,207.25 late in New York on Thursday. U.S. gold
futures for June delivery <GCM0> on the COMEX division of the
New York Mercantile Exchange rose $4.60 to $1,201.90 an ounce.
Gold held above earlier lows of $1,192.65, resisting selling
of other assets on Friday as commodities like oil and stock
markets on both sides of the Atlantic fell sharply.
Citigroup analyst David Thurtell said he expected gold to
hold its ground near $1,200 as risk-averse investors buy gold
above more volatile assets.
"Gold is now enjoying safe haven status, partly because
bonds, particularly peripheral euro zone government and bank
paper, are no longer a safe haven," he said.
The euro <EUR=> pared losses after dropping against the
dollar on Friday as fears persisted that Greece's debt crisis
could spread to other euro zone countries. European and U.S.
stock markets also dropped sharply. [] [] []
Oil prices slid $2 a barrel to near $75 as Wall Street
tumbled and the dollar firmed. []
The dollar <.DXY> rose against a basket of currencies as
other asset prices fell. Usually this would pressure gold, but
the usual link between the two assets has weakened.
"Going forward, a strengthening dollar should be
counterbalanced by safe haven demand for gold, stemming from the
current debt issues affecting the euro zone," said BNP Paribas
analyst Anne-Laure Tremblay.
MOVE HIGHER PREDICTED
Investors see gold moving higher after is consolidates near
$1,200. The precious metal has risen almost 2 percent this week
as investors sought a haven from euro zone debt risks, climbing
as high as $1,210.35 an ounce on Thursday.
Although it has since given up some of those gains, the
metal still has its sights firmly set on December's all-time
high of $1,226.10 an ounce, traders said.
"Certainly a pull-back in this market is more than likely,
but the overall trend for gold is higher," said Peter Hillyard,
head of metals sales at ANZ Bank in London. "Gold's run-up is
related to the various economic themes running through Europe."
"People (are) fearful of what is happening to the euro and a
recognition of the financial mess that people find themselves
in," he said. "That has people focusing more on what is a
reasonably safe haven, and that is gold."
Physical investment demand for gold soared on Thursday,
dealers said. Holdings of the world's largest gold
exchange-traded fund, the SPDR Gold Trust <GLD>, jumped nearly
20 tonnes -- its biggest one-day volume rise since Feb. 2009 --
to a record 1,185.787 tonnes on Thursday. []
An inconclusive outcome to the bitterly fought UK election
on Friday lifted sterling gold <XAUGBP=R> to a record 828.60
pounds an ounce. []
"For sterling investors, there aren't many other places
which look like being a sound and stable store of wealth for the
near term," said Adrian Ash, head of research at gold dealer the
Bullion Vault.
Platinum <XPT=> continued its recovery from Wednesday's
one-month low, rising to $1,656 an ounce from $1,625. Palladium
<XPD=> was flat at $502.50, and silver <XAG=> at $17.67 an ounce
against $17.61.
(Editing by Sue Thomas)
