* Risk aversion pressures stocks, lifts dollar
* SPDR gold ETF holdings hit another record high
* Traders eye jobs data later in the week
(Updates prices, adds comment)
By Jan Harvey
LONDON, June 2 (Reuters) - Gold slipped below $1,220 an
ounce in Europe on Wednesday as investors cashed in some of the
previous session's gains, but investment demand for the metal as
a haven from risk is expected to continue to underpin prices.
The dollar strengthened and equity markets slipped as
persistent fears the euro zone's debt crisis could hamper the
wider economic recovery continued to pressure assets seen as
higher risk, supporting the investment case for gold.
Spot gold <XAU=> was bid at $1,216.65 an ounce at 1352 GMT,
against $1,224.30 late in New York on Tuesday. U.S. gold futures
for June delivery <GCM0> on the COMEX division of the New York
Mercantile Exchange eased $8.30 to $1,216.70 an ounce.
"We have had some reports that (gold) mine supply is
actually doing quite well, and jewellery demand is looking much
weaker with the import data from India and Turkey out this
week," said Barclays Capital analyst Suki Cooper.
"(So) fundamentals look quite weak, but... investment demand
still looks supportive. Consolidating around these levels looks
likely at the moment, but as long as investment demand looks
strong we would expect higher highs throughout the year."
Commerzbank analyst Eugen Weinberg said a rise in U.S. Mint
gold coin sales in May to their highest since 1999 pointed to
elevated risk aversion among private investors. []
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, also rose 0.3 tonnes to
a record 1,268.234 tonnes on Tuesday. []
The euro <EUR=> stayed under pressure amid concern over the
indebtedness of some euro zone states, unable to sustain a move
higher made after some of the world's major central bankers said
they would not stop investing in the single currency. []
Iran's state-owned Press TV said the Iranian central bank
would sell 45 billion euros from its foreign exchange reserves
to buy dollars and gold. []
CORRELATION
Usually a weaker euro would weigh on gold, but the precious
metal has given up its usual strong negative correlation with
the U.S. dollar as both assets benefit from risk aversion.
"Many of the current market conditions for gold closely
resemble those of Q1 2009 -- elevated coin and bar demand,
stellar ETF creations, increased Comex positioning and a
positive correlation with the U.S. dollar index," said UBS
analyst Edel Tully in a note.
Equity markets fell in Europe, meanwhile, with banks under
pressure and BP <BP.L> down after the United States launched a
criminal probe into the Gulf of Mexico disaster. []
"The month of May and start of June has seen gold's safe
haven properties realised and its inverse correlation with
equities has again been clearly shown," said gold dealer
Goldcore in a note.
The financial markets are awaiting U.S. jobs data due later
in the week, culminating in May's key non-farm payrolls number
on Friday, for clues as to the next direction of trade.
Elsewhere, the International Montary Fund confirmed it sold
14.4 tonnes of gold in April, extending its programme of planned
bullion sales following the disposal of 5.6 tonnes in February
and 18.5 tonnes in March. []
Among other precious metals, platinum <XPT=> was at $1,533
an ounce against $1,545, while palladium <XPD=> was at $445.50
against $454.50, declining amid concern over the demand outlook
for industrial metals.
Platinum group metals traders are currently awaiting car
sales data from the U.S., China and Europe. The PGMs were
supported early in the year by strong investment demand, but
there are signs this is plateauing.
Elsewhere spot silver <XAG=> was at $18.11 against $18.37.
(Editing by Keiron Henderson)
