* ECB warns euro zone banks may see second wave of losses
* Euro slid to 4-yr low versus dollar on latest debt worry
* Investors flock to gold as safe haven, inflation hedges
(Updates prices, comment, first paragraph. Changes dateline,
byline, headline, tagline. Rewrites throughout.)
By Carole Vaporean
NEW YORK, June 1 (Reuters) - Gold rose toward $1,230 an ounce
on Tuesday as investors bought the metal as a haven from debt
problems in the euro zone, after the European Central Bank warned
the region's banks may face a fresh wave of losses.
Spot gold was bid at $1,224.55 an ounce <XAU=> at 15:25 p.m.
EDT (1925 GMT), up from $1,214.20 late in New York on Friday. U.S.
gold futures for August delivery on the COMEX division of the New
York Mercantile Exchange closed $11.90 higher at $1,226.90 an
ounce.
Earlier in the session, both gold bullion and COMEX gold
futures reached their highest levels since May 18 despite dollar
gains against the euro.
"That was certainly done on the back of the European Central
Bank stating that euro zone banks might have to write off another
195 billion euros of loans. So what you're seeing once again is
investors focusing on gold as that safe-haven asset or currency
hedge," said David Meger, director of metals trading for Vision
Financial Markets in Chicago.
The yellow metal was drawing support from concerns that
sovereign debt problems in euro zone countries like Greece, Spain
and Portugal may ultimately damage the wider economy.
"The macroeconomic problems in the global economy (are)
primarily to do with massive debts of sovereign states," said
Angelos Damaskos, chief executive officer of Sector Investment
Managers Ltd.
"The only realistic solution to finance that kind of debt is
to print a lot of money and deflate away from the debt. That would
be inflationary in the short term," he added, which would give
additional support to gold as an inflation hedge.
Investors who believed the world's main currencies -- the
dollar, euro and pound -- were being undermined by sovereign debt
concerns were looking for alternative assets.
"They will look at traditional stores of value such as gold,"
Damaskos said.
The ECB warned on Monday that euro zone banks face up to 195
billion euros ($236.9 billion) in a "second wave" of potential
loan losses over the next 18 months due to the financial crisis.
The euro tumbled to a fresh four-year low against the dollar,
because of fears the sovereign euro debt crisis was spreading to
the banking system. []
INVESTMENT DEMAND REMAINS
Investment demand for gold held steady, with holdings of the
world's largest gold exchange-traded fund, New York's SPDR Gold
Trust, still at a record 1,267.93 tonnes on Monday.
Sean Corrigan, chief investment strategist at Diapason
Commodities Management, said he saw gold and to a lesser extent
silver as "insurance policies" against wider market risk.
Silver futures reversed early losses to finish the session
higher. In the spot market, the grey metal was bid at $18.43 an
ounce compared with $18.49 late on Friday.
Platinum was quoted at $1,544.50 an ounce, below $1,558.50
previously, while palladium was lower at $456.50 against $465.10
last Friday.
On Tuesday, ETF Securities, the U.K. firm running the first
U.S. platinum and palladium exchange-traded funds, said it issued
additional shares in the two products, raising their combined
value to $871 million. []
(Additional reporting by Jan Harvey in London; editing by Jim
Marshall)
