PRECIOUS-Gold rises toward record on flight from risk

                                
 * Gold up 4 pct for week; best 3-week gain since Dec.
                                
 * SPDR gold ETF holdings rise by most since Feb. 2009
                                
 * Physical gold dealers say sales surge amid turmoil
                                
 * Coming up: U.S. April employment index on Monday
 (Updates paragraphs 7, 8 to show U.S. gold coin sales surge
this week)
                                
 By Frank Tang
                                
 NEW YORK, May 7 (Reuters) - Gold rallied on Friday to near
a record high, posting its biggest three-week gain since
November as investors cut exposure to risks stemming from
Greece's debt crisis and tumbling global stock markets.
                                
 Gold futures rallied in afternoon trade to the firmest
since Dec. 4 as volatile equities and currencies prompted
nervous anxious investors to buy gold.
                                
 Investors piled into gold exchange traded funds and coins
and bars, with bullion holdings in the biggest gold-backed ETF
rising 20 tonnes on Thursday, the biggest one-day gain since
February 2009.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 For a graphic of tonnage growth in SPDR Gold Trust, click:
                                
 http://link.reuters.com/qen23k
                                
 For a graphic of American Eagle 1-ounce gold coins sales,
click:
                                
 http://link.reuters.com/qev23k
                                
 For a graphic of gold's weekly price performance, click:
                                
 http://link.reuters.com/tat23k
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 "As a currency hedge and non-correlated asset, gold
provides diversification as people are worrying about the euro,
sovereign debt and the impact to the euro zone," said Dan
Denbow, co-manager of the USAA Precious Metals and Minerals
Fund <USAGX.O>, which has $1.56 billion in mutual fund assets.
                                
 "When you see the dollar and gold moving together, that's a
real indicator of safe-haven trade."
                                
 Spot gold <XAU=> was at $1,209.65 an ounce at 3:45 p.m. EDT
(1945 GMT), against $1,207.25 late in New York on Thursday.
U.S. June gold futures <GCM0> on the COMEX division of the
NYMEX settled up $13.10, or 1.1 percent, at $1,210.40 an
ounce.
                                
 U.S. gold coin sales also surged, as the U.S. Mint sold
gold coins this week at twice its normal pace, and a leading
retailer said Thursday was a record day. [ID:N07627392]
                                
 "Yesterday was our biggest day of the year in terms of
investors buying gold," said David Beahm, vice president of
marketing at top U.S. retail gold coins dealer Blanchard & Co.
                                
 While oil fell for a fourth straight day on Friday and U.S.
stock indexes have wiped out all of this year's gains, gold has
gained as much as $50 an ounce in the past two days,
underscoring skittishness and mounting worries about euro zone
contagion from Greece's debt problems.
                                
 "Gold is now enjoying safe-haven status, partly because
bonds, particularly peripheral euro zone government and bank
paper, are no longer a safe haven," said Citigroup analyst
David Thurtell.
                                
 The euro <EUR=> recovered from a 14-month low against the
dollar, but the single currency was still headed for its worst
week against the dollar since October 2008. [FRX/]
                                
 MOVE HIGHER PREDICTED
                                
 Investors expect gold to move higher after consolidating
near $1,200. The precious metal has risen more than 4 percent
this week. Gold is now about $20 below an all-time high of
$1,226.10 an ounce set on Dec. 3.
                                
 Some analysts questioned whether gold can sustain its
rally. They cited signs of stalling investment demand.
                                
 Holdings of the world's largest gold exchange-traded fund,
the SPDR Gold Trust <GLD>, jumped nearly 20 tonnes to a record
1,185.787 tonnes on Thursday. Year to date, however, GLD
holdings has gained just 50 tonnes. [GOL/SPDR]
                                
  For precious metals with strong industrial demand
component, silver <XAG=> was at $18.32 an ounce against $17.61.
Platinum <XPT=> rose to $1,660.50 an ounce from $1,625, while
Palladium <XPD=> was at $510, higher than the $502.50 late in
New York on Thursday.
                                
                     Close  Change   Pct    2009     YTD
                                
                                     Chg   Close   % Chg
US gold      <GCM0>    1210.40    13.1   1.1 1096.20    10.4
US silver    <SIN0>     18.451   0.936   5.3  16.845     9.5
US platinum  <PLN0>    1665.80   -0.70   0.0 1471.00    13.2
US palladium <PAM0>     510.20   -3.90  -0.8  408.85    24.8
Prices at 4:09 p.m. EDT (2009 GMT)
Gold         <XAU=>    1207.30    0.05   0.0 1096.35    10.1
Silver       <XAG=>      18.30    0.69   3.9   16.84     8.7
Platinum     <XPT=>    1660.50   35.50   2.2 1465.50    13.3
Palladium    <XPD=>     510.00   7.500   1.5  405.50    25.8
Gold Fix     <XAUFIX=> 1202.25    2.65   0.2    1104     8.9
Silver Fix   <XAGFIX=>   17.70    1.00   0.1   16.99     4.2
Platinum Fix <XPTFIX=> 1651.00   10.00   0.6    1466    12.6
Palladium Fix<XPDFIX=>  505.00    2.00   0.4     402    25.6
                                
 (Additional reporting by Jan Harvey in London; Editing by
David Gregorio)