* Gold at six-month high in euro terms on flight to safety
* U.S., European stock markets tumble on investor worries
* Platinum, palladium, silver track gold higher
(Adds comment, updates prices)
By Jan Harvey
LONDON, Oct 6 (Reuters) - Gold prices rose nearly 5 percent
on Monday, leading other precious metals higher, as a slide in
stock markets sparked a flight to safety.
In euro terms, the metal reached 645.33 euros an ounce, its
strongest since late March, when it hit a record high of 651.54.
Traders largely shrugged off the effects of a firmer dollar
and weaker oil prices -- usually the main external drivers of
gold -- which should have pressured the metal lower. Platinum,
silver and palladium all posted gains in gold's wake.
Spot gold <XAU=> was quoted at $873.50/875.50 an ounce at
1413 GMT, up from $834.80 in late New York trade on Friday.
"There is a flight to gold as a safe haven again today,
which is supporting prices," said Dresdner Kleinwort consultant
Peter Fertig.
"The factors which normally drive gold are heading lower,
except the stock markets, and the rising risk aversion of
investors."
U.S. stocks slid at the open, reflecting losses on European
markets earlier in the session, as the widening fallout from the
credit crisis spooked investors. []
Losses on the equity markets typically spur buying of
alternative assets, such as bullion.
The precious metal also benefited from strong demand from
smaller investors for investment coins and bars.
"We feel extremely positive on gold prices as investors rush
to buy gold coins as protection against further market
volatility," said Fairfax analyst John Meyer.
"Gold seems so much more tangible an investment than many
other instruments and is not vulnerable to rising supply," he
added. "(And) gold looks good in an inflationary environment."
Gold largely shrugged off dollar strength. The U.S. currency
hit a 13-month high against the euro as investors worried about
the outlook for European banks after leaders decided against a
common bank bailout plan over the weekend. []
The other main external driver of gold, oil, also weighed on
bullion prices. U.S. crude futures slipped to an eight-month low
below $90 a barrel as traders worried efforts to avert further
financial turmoil would not stem falling demand. []
Gold usually moves in tandem with crude, as it is often
bought as a hedge against oil-led inflation.
FIRM DEMAND
Prices are being supported by interest in bullion-backed
exchange traded funds. The two main gold and silver ETFs remain
near record levels, despite recent outflows.
Holdings of the SPDR Gold Trust <GLD>, the world's largest
gold-backed ETF, eased 2 percent from last week's record highs
on Friday, according to the fund. []
The amount of metal held to back the largest silver ETF has
also slipped from record levels. The iShares Silver Trust
<SLV.A> said its holdings eased 3/4 of a percent or just over 50
tonnes week-on-week to 6,849.50 tonnes on Friday.
Silver ETFs have proved popular in recent months as lower
silver prices attract more retail investors to the market.
Spot silver <XAG=> was quoted at $11.27/11.37, up from
$11.09 in late New York trade on Friday.
Among other precious metals, platinum <XPT=> tracked gold
higher, rallying more than 3 percent to $984.50/1,004.50 an
ounce from $950. Palladium <XPD=> climbed to $197/207 an ounce
from $194.
(Reporting by Jan Harvey; editing by Christopher Johnson)
