* Euro zone tensions mount but firmer dollar no drag on gold
* Traders await outcome of G20 meeting in Seoul
* Palladium outperforms other major precious metals
(Updates prices)
By Jan Harvey
LONDON, Nov 11 (Reuters) - Gold rose as much as 1 percent in
Europe on Thursday as concerns over sovereign debt in some
peripheral euro zone economies intensified, boosting interest in
the precious metal as a safe store of value.
The markets are nervous over a meeting of Group of 20
leaders this week, at which currency imbalances may be
addressed. Worries over the stability of the foreign exchange
markets has been a key support for gold this year.
Spot gold <XAU=> hit a high of $1,417.80 an ounce, near the
record $1,424.10 an ounce it hit earlier this week, and was at
$1,413.60 at 1213 GMT versus $1,402.70 late on Wednesday.
U.S. gold futures for December delivery <GCZ0> rose $14.40
to $1,413.70 an ounce. Euro-priced gold <XAUEUR=R> also rose,
reaching its highest since mid-June at 1,033.33 euros an ounce.
"The dollar is a tad firmer, but so are commodities in
general," said Saxo Bank general manager Ole Hansen. "We have
not seen anything on the currency front yet that could rattle
people's belief in higher commodity prices.
"(There is) nervousness about the outcome of the G20 and the
European debt situation," he added. "As we edge closer to the
time of year where position reductions begins to kick in, I see
the sector supported as long as we do not see sudden strength in
the dollar."
The dollar rose against the euro on Thursday, with tensions
in the euro zone periphery expected to trigger further selling
of the single currency as investors fretted over the outlook for
the Irish and Portuguese deficits. []
A stronger dollar usually weighs on gold, but risk aversion
kept the metal supported. The cost of insuring Spanish,
Portuguese and Irish debt against default hit record highs as
market jitters over euro-peripheral economies rose. []
"Worries over euro zone troubles were still mounting amid
fears that Ireland will have to resort to a Greek-style bailout
should the situation worsen," said VTB Capital analyst Andrey
Kryuchenkov in a note.
"A stronger dollar is still capping the upside in gold, but
should risk sentiment turn outright sour, gold would decouple
from the rest of the precious complex with investors running for
bullion's safety amid rising currency and sovereign risks."
SCRAP SELLING RISES
In Asia, traditionally a key region for gold consumption,
gold scrap selling increased after spot prices hit record highs,
though it fell short of meeting burgeoning demand. []
"The collection of scrap has definitely increased compared
to last week, but not enough to fulfil fresh demand in the
market," said a dealer with Mumbai's Jugraj Kantilal & Co.
Among other precious metals, silver <XAG=> rose to $27.70 an
ounce against $27.20. Holdings of the iShares Silver Trust
<SLV>, the world's largest silver exchange-traded fund, rose 3.4
percent to a record 10,718.82 tonnes by Nov 10, it said.
"At 40.6 million ounces over the past five business days,
global ETF investment enjoyed its largest absolute one-week
increase since the first week of the first-ever contact
(iShares) in April 2006," said UBS analyst Edel Tully in a note.
"The increase in ETF holdings is the most visible sign of
current investor support for silver."
The ratio of gold to silver -- the number of ounces of
silver needed to buy an ounce of gold -- slipped back towards
the 2-1/2 year low near 50 it reached earlier this week.
Elsewhere platinum <XPT=> was at $1,764 an ounce against
$1,735.99, while palladium <XPD=> was at $716.50 versus $699.
Palladium was the biggest riser among other precious metals
on Thursday, up 2.6 percent, but it was still off the 9-1/2 year
high at $740.72 an ounce it hit on Tuesday.
(Reporting by Jan Harvey; editing by Janet Lawrence)
