* World Gold Council says 2008 gold demand rises 4 pct
* SPDR Gold Trust breaks 1,000 tonne mark
* Records set in sterling, rand, Canadian/Australian dollars
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By Jan Harvey
LONDON, Feb 18 (Reuters) - Gold eased a touch on Wednesday
as buyers took a breather after pushing the metal to a fresh
seven-month high earlier in the session, but strong demand for
gold as a haven from risk is providing good support to prices.
Spot gold <XAU=> was quoted at $964.60/966.20 an ounce at
1227 GMT, down from $968.35 late in New York on Tuesday.
"The charts are looking a bit stressed out after the
relentless rally over the last couple of sessions," Pradeep
Unni, senior analyst at Richcomm Global Services, said.
"Though bullish momentum is still in place, a slight
reversal would be necessary to provide the steam to head higher.
In the immediate term, $974 needs to be scythed, beyond which
another hurdle is at $988."
The metal reached a high of $973.50 an ounce earlier in the
session, its firmest since July 22, as investors bought gold and
bullion-backed exchange-traded funds as a safe store of value.
Gold also hit new highs in sterling, South African rand and
Canadian and Australian dollar terms.
"The unprecedented fragility of confidence is forcing
investors back into safe havens, with gold the top beneficiary,"
said Gary Dugan, chief investment officer for Merrill Lynch
Global Wealth Management.
"Distressed financial sectors highlight the merit of
precious metals as a secure store of value, while overly
successful monetisation of debt threatens sharply higher
inflation down the line," he added.
"It is not clear how gold would perform under stagflation,
but investors are happy to take on that risk right now."
Risk aversion flared this week after Moody's threatened to
downgrade banks with exposure to the weakening central and
eastern European economies, and Standard and Poor's said it may
review emerging Europe bank ratings. []
Holdings of the world's largest gold-backed ETF, the SPDR
Gold Trust, leapt to a record high above 1,000 tonnes on Tuesday
as fears of a deepening global recession and the prospect of
inflation fuelled buying.
A World Gold Council report released on Wednesday showed
physical gold demand rose sharply in the second half of 2008.
Identifiable investment demand for gold, which includes ETFs,
bars and coins, was up 64 percent in 2008 over the year before.
FEAR
World Gold Council investment research manager Rozanna
Wozniak said fear was behind the rise in investment.
"People are worried about their assets, worried about their
savings, and scared about the banking system, and they are
looking for protection," she told Reuters.
"Further out, there is still the prospect of inflation,
particularly given that many governments are having to fund very
large fiscal deficits."
Total demand for gold ETFs doubled in the second half of
2008 from the first to 244.7 tonnes, the WGC said.
[]
In contrast, holdings of the SDPR Gold Trust have surged by
more than 228 tonnes in 2009 to date alone. The trust's reserves
now stand at 1,008.8 tonnes, as of Feb.17. []
The main external drivers of gold lent little direction. The
dollar recovered from earlier technically driven losses versus
the euro. A stronger dollar typically weighs on gold, but both
are currently supported by risk aversion. []
Oil, which often pulls gold in its wake, held around $35 a
barrel after the previous session's near 7 percent losses, on
fresh concerns over the economy. []
Among other precious metals, silver eased after climbing to
a six-month high of $14.31 an ounce, tracking gains in gold. The
metal is also being lifted by flight-to-safety buying and
interest in silver-backed ETFs.
Spot silver <XAG=> was at $14.05/14.12 an ounce from $14.10.
Platinum meanwhile climbed to a 4-1/2 month high of
$1,109.50, also boosted by gains in gold, with dealers and
analysts reporting lower prices have boosted jewellery demand.
Spot platinum <XPT=> was later at $1,095/1,100 an ounce from
$1,088, while spot palladium <XPD=> rose to $216.50/221.50 an
ounce from $216.50.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
