* Euro steadies after hitting 4-year low vs dollar
* Investors sell gold to cover losses in other markets
* Gold seen striking new highs after consolidation phase
(Recasts, updates prices, adds fresh quote)
By Maytaal Angel
LONDON, May 17 (Reuters) - Gold steadied on Monday as a
rally to record highs ran out of steam, but the metal was
expected to regain the uptrend as concerns over Europe's debt
crisis continue to boost its safe haven appeal.
Spot gold <XAU=> traded at $1,227.35 at 1321 GMT versus
$1,230.05 late in New York on Friday, when it set a record of
$1,248.95.
"We're seeing other markets suffering heavy losses and that
could cap gold in the short term because there is a tendency to
release profitable positions to pay for non-profitable ones,"
said Ole Hanson, analyst at Saxo Bank.
But he added: "I don't see a complete turnaround. The
momentum is with gold at the moment and unless the market takes
a different view of the euro zone debt crisis we'll remain
supported."
U.S. stock index futures fell on Monday while the euro
steadied versus the dollar after hitting a four-year low earlier
as sovereign debt worries fuelled concerns the single currency
may fall further. [] []
Gold usually trades in step with the euro and counter to the
U.S dollar as it is seen as an alternative asset to the U.S.
currency. However, the metal is currently being bought as a safe
haven asset and hedge against currency volatility.
"While we expect volatility to remain high with respect to a
strengthening U.S. dollar against the euro, safe-haven buying
will likely remain the predominant factor in price movements in
the coming weeks," Morgan Stanley said in a note.
U.S. gold futures <GCc1> added $1.1 to $1,228.50 an ounce.
Gold priced in euros <XAUEUR=R> and sterling <XAUGBP=R> struck a
record overnight as did gold futures in Shanghai <0#SHAU:>.
On Sunday, German Chancellor Angela Merkel said a $1
trillion EU rescue plan had only bought the euro zone time to
tackle its fundamental problem -- a yawning gap between its
strongest and weakest economies. []
ANXIETY
Investors doubt fiscally weaker euro zone nations can
tighten their belts, or do so without stunting growth, and there
are signs anxiety over Europe is squeezing credit markets.
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For a graphic of the gold technical outlook, click:
http://graphics.thomsonreuters.com/gfx/CT_20101705094907.jpg
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Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust <GLD>, rose to a lifetime high of
1,214.065 tonnes as investors sought a safe haven from volatile
currencies, and declines in stock markets.
In other precious metals, silver <XAG=> was down at $19.27
an ounce versus $19.25, platinum <XPT=> fell to $1,690 versus
$1,715.50 while palladium <XPD=> dropped to $513 versus $523.50.
Weighing on the latter two metals used to make
auto-catalysts was news that new European car sales fell for the
first time in 10 months in April. []
Longer term, however, prospects for the metals remain
bright.
According to a Reuters poll, average platinum and palladium
price forecasts have climbed since January on quickly rising
spot prices and hopes for an uptick in investment and industrial
demand. []
Also, Johnson Matthey said in an annual report released
earlier that rising investment may take platinum to $2,000 an
ounce in the next six months while palladium could hit levels
not seen since 2001. []
For an interview with Johnson Matthey click []
For a factbox on platinum and palladium market balances
click: []
(Reporting by Maytaal Angel; Editing by Sue Thomas)
