* Gold edges back from all-time high as rally peters out
* Europe debt crisis, U.S. money supply in focus
* Silver touches highest since 1980 above $30/oz
(Updates prices, adds comment)
By Amanda Cooper and Jan Harvey
LONDON, Dec 7 (Reuters) - Gold retreated from record highs
on Tuesday as traders cashed in some gains, but the prospect of
more U.S. monetary easing and investor nervousness over the
European debt crisis still firmly underpinned the market.
The metal retreated back below $1,410 an ounce as its run
higher lost traction, but remains well supported as investors
push into commodities ahead of the year-end, analysts said.
Spot gold <XAU=> slipped as low as $1,406.30 in midafternoon
trade, having earlier hit a record $1,430.95 an ounce. By 1551
GMT it was bid at $1,414.00, against $1,422.85 late on Monday.
Gold priced in euros <XAUEUR=R> also hit a record high at
1,072.03 euros an ounce before retreating. U.S. gold futures for
February delivery <GCG1> eased $1.00 an ounce at $1,415.10.
"The market had really run out of momentum, and although we
made new highs, it was more on sentiment than on fresh
business," said Simon Weeks, head of precious metals at the Bank
of Nova Scotia.
Gold's retreat was in line with a pullback in other
commodities, with copper also easing back from record highs and
oil slipping from an earlier two-year high. [] []
Nontheless the precious metal is likely to remain supported
by concerns over the financial health of the euro zone.
Germany and other euro zone states resisted calls on Monday
from the International Monetary Fund to do more to quell the
bloc's debt crisis, although the euro firmed on optimism that
Ireland would pass an austerity budget. [] []
"Even though the euro is regaining a little bit of strength
against the dollar after the losses yesterday, it is still on
the weak side, and fears of contagion are lingering," said Peter
Fertig, a consultant at Quantitative Commodity Research. He was
referring to worry debt problems would spread in the euro zone.
SAFE HAVEN
"The decision from the Berlin government not to increase the
volume of the European financial stability fund and also not to
introduce so-called E-bonds for the whole euro zone is still a
factor which is supporting gold as a safe haven.
"The interview Bernanke gave over the weekend that QE3 would
be possible is another factor supporting gold," he added.
Federal Reserve Chairman Ben Bernanke signalled on Sunday
the central bank could expand its existing quantitative easing
programme by buying more government bonds. []
With the U.S. dollar set to come under more pressure from
the prospect of rising money supply, gold should reap the
benefits of investors seeking an alternative to volatile
currencies, analysts said.
However, the end of the year traditionally brings with it
less liquidity and greater potential for rapid shifts in price
direction, meaning that gold could see more setbacks before
resuming its uptrend.
"Tactical investors have turned positive on gold and silver
and increased their long exposure. In our view, positioning does
not look excessive, suggesting that the sector could attract
further near-term flows," said Credit Suisse analysts in a note.
"However, with markets closing in on critical price levels,
risks of investors' taking profits have increased as well."
Elsewhere silver <XAG=> hit fresh 30-year highs at $30.68 an
ounce, and was later trading at $30.06, against $30.14.
The number of ounces of silver needed to buy one ounce of
gold hit its lowest level since February 2007 at just 46.99,
having declined from a seven-month high this February at 70.91.
Platinum <XPT=> eased 0.5 percent to $1,712.74 an ounce,
while palladium <XPD=> was down 0.3 percent at $752.97.
(Editing by Keiron Henderson)
