* World Gold Council says 2008 gold demand rises 4 pct
* SPDR Gold ETF, iShares Silver ETF hit records
* Records set in sterling, rand, Canadian/Australian dollars
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 18 (Reuters) - Gold eased on Wednesday as the
market took a step back after hitting seven-month highs in
earlier trade, but demand for gold as a haven supported prices.
Spot gold <XAU=> was at $966.45/968.45 an ounce at 1523 GMT,
down from $968.35 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ9> on the COMEX division of the New York
Mercantile Exchange eased 40 cents to $967.40 an ounce.
"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.
"Although bullish momentum is still in place, a slight
reversal would be necessary to provide the steam to head
higher."
The metal reached a peak of $973.50 an ounce earlier in the
session, its highest since July 22, and hit new highs in a raft
of currencies as investors bought gold and bullion-backed
exchange-traded funds as a safe store of value.
"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."
A World Gold Council (WGC) report released Wednesday showed
gold demand rose sharply in late 2008. Identifiable investment
demand for products such as ETFs, bars and coins, was up 64
percent in 2008 over the year before, it said in a statement.
WGC investment research manager Rozanna Wozniak said fear
lay 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.
DOUBLED
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
jumped to a record 1,008.8 tonnes on February 17. []
The main external drivers of gold, oil and the dollar, lent
little direction.
"In the past, gold functioned as a hedge to dollar weakness,
given its function as a store of value," said Lee Hardman,
analyst at the Bank of Japan-Mitsubishi.
"However this tight inverse relationship has started to
weaken as intense risk aversion has fuelled safe haven demand
for both the dollar and gold."
He said the appeal of gold as a store of value has also been
enhanced by the increasing likelihood that major central banks
will turn to quantitative easing.
"It is no coincidence that the start of recent rally in gold
coincided with the Fed's formal acknowledgement of the adoption
of quantitative easing on the 17 December," he said.
Among other precious metals, silver eased after climbing to
a six-month high of $14.31 an ounce, tracking gains in gold.
The world's largest silver ETF, the iShares Silver Trust
<SLV> said its holdings rose 51.25 tonnes to a record 7,659.04
tonnes on February 17. []
"There has been some substitution of gold for silver, as
gold prices are relatively high," said BNP Paribas metals
analyst Michael Widmer.
Silver <XAG=> was at $14.16/14.22 an ounce from $14.10,
platinum <XPT=> was at $1,093.50/1,098.50 an ounce from $1,088,
and palladium <XPD=> rose to $216.50/221.50 an ounce from
$216.50.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
