* Rise in risk appetite takes heat out of safe-haven
* Gold holds up well despite massive euro-zone rescue deal
* Economic uncertainty after bailout could support
* Platinum, palladium climb as fundamentals return to fore
* Coming up: U.S. federal budget due Wednesday
(Recasts, adds comments, closing prices, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, May 10 (Reuters) - Gold slipped less than 1
percent on Monday despite a sharp return of risk appetite, as
uncertain economic fallout related to the euro-zone's debt
crisis bolstered the metal's safe-haven appeal.
A $1 trillion global emergency package to stabilize the
euro lifted platinum group metals to their firmest since 2008.
Mihir Dange, a COMEX floor trader, said that gold was
holding relatively firm as the massive $1 trillion bailout
could lead to negative economic implications and could weigh
down on the euro in longer term.
Also, gold's inverse link with the dollar could remain weak
for the near term, Dange said.
"Until there is some normalcy back into the market, the
correlation you might see is that gold may trend with the stock
market and the dollar, as opposed to the euro," he said.
Last week, gold had climbed 4 percent due to contagion
fears, while U.S. gold coin sales also surged, as the U.S. Mint
sold gold coins at twice its normal pace, and a leading
retailer said Thursday was a record day. []
Spot gold <XAU=> was at $1,200.25 an ounce at 3:04 p.m. EDT
(1904 GMT), against $1,207.75 late in New York on Friday. It
sharply cut losses after trading as low as $1,183.85 in early
trade.
U.S. June gold futures <GCM0> on the COMEX division of the
NYMEX settled down $9.60 at $1,200.80 an ounce.
The global aid package reversed last week's sharp decline
in world financial markets. The euro <EUR=> rallied and the S&P
500 index <.SPX> jumped 3.5 percent. [] [] []
"Today we are seeing a reversal of previous safe-haven
flows," said Tobias Merath, an analyst at Credit Suisse. "The
medium-term consequence of what is going on is probably easier
monetary policy."
But the package left longer-term questions about whether
Europe's weakest economies can manage their debt. []
Goldman Sachs said that gold prices in the near term would
benefit from low real interest rates and accommodative U.S.
monetary policy.
"Longer term, however, we continue to see considerable
downside risk, should the U.S. Federal Reserve tighten monetary
policy earlier than expected," Goldman said in a note.
PHYSICAL DEMAND PICKS UP
Falling gold prices benefited physical demand, with a 3
percent drop in Indian prices triggering buying of the metal
there ahead of a key festival, dealers said. []
Other commodities largely rallied on news of the European
rescue package in line with assets seen as higher risk. Oil
prices surged 2.5 percent to their highs on Monday, and base
metals prices also jumped. [] []
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For a graphic showing various commodities' price
performance this year, click on:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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Platinum group metals also rose, with palladium <XPD=>
climbing more than 3 percent and platinum <XPT=> up 2 percent.
Both reflect strong underlying fundamentals, analysts said.
Palladium rallied to a two-year high and platinum to its
strongest since July 2008 earlier this year as hopes for a
recovery in car demand boosted buying, before coming off
initial highs.
Platinum was last at $1,690.50 an ounce against $1,656.50,
and palladium at $526 against $510.
Silver <XAG=> was at $18.43 an ounce against $18.30.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1200.80 -9.6 -0.8 1096.20 9.5
US silver <SIN0> 18.552 0.101 0.5 16.845 10.1
US platinum <PLN0> 1693.50 27.70 1.7 1471.00 15.1
US palladium <PAM0> 524.50 14.30 2.8 408.85 28.3
Prices at 3:12 p.m. EDT (1912 GMT)
Gold <XAU=> 1200.50 -7.25 -0.6 1096.35 9.5
Silver <XAG=> 18.43 0.13 0.7 16.84 9.4
Platinum <XPT=> 1690.50 34.00 2.1 1465.50 15.4
Palladium <XPD=> 526.00 16.000 3.1 405.50 29.7
Gold Fix <XAUFIX=> 1196.50 8.25 0.7 1104 8.4
Silver Fix <XAGFIX=> 18.46 76.00 4.3 16.99 8.7
Platinum Fix <XPTFIX=> 1694.00 2.00 0.1 1466 15.6
Palladium Fix<XPDFIX=> 528.00 3.00 0.6 402 31.3
(Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy)
