PRECIOUS-Gold gains in safety bid amid steep PGM declines

                                
 * Gold supported by haven demand, capped by dollar gains
                                
 * SPDR gold ETF holdings rise more than 16 T to record
 (Releads with gold, changes byline, dateline and updates prices)
                                
 By Carole Vaporean and Jan Harvey
                                
 NEW YORK/LONDON, May 25 (Reuters) - Gold prices pushed higher on
Tuesday in a safe-haven play, while platinum group metals took a
heavy hit with other industrial metals, as investors feared a second
economic slowdown on credit woes in Europe.
                                
 Gold's gains were stunted by the euro's losses to near four-year
lows against the dollar. Spain took over a small bank over the
weekend, fanning fears the euro zone's sovereign debt crisis was
spreading. [USD/]
                                
 Meanwhile, platinum and palladium fell sharply, resuming last
week's slide, as investors took fright at a further drop in the euro
and equity markets, and industrial end-users held out for lower
prices.
                                
 Earlier, gold prices rose above $1,200 an ounce as persistent
worries from sovereign debt concerns attracted some safe-haven
demand.
                                
 Spot gold <XAU=> was bid at $1,195.05 an ounce by 2:05 p.m. EDT
(1804 GMT), against $1,190.05 late in New York on Monday.  It hit a
session high of $1,200.15 in early trade.
                                
 Platinum <XPT=> fell around 3 percent to a low of $1,478.25 and
was later at $1,492.75 an ounce against $1,526.50. Palladium <XPD=>
was at $432.75 against $444.50, having hit a session low of $420.88,
down 5.3 percent.
                                
 Platinum slid 12.3 percent last week and palladium 17.2 percent,
its worst weekly loss since 2003, as a bout of fund selling early in
the week sparked sharper losses in the metals. Both metals hit their
lowest since February this year.
                                
 While interest by industrial users lifted prices in the last two
sessions, caution towards the metals has reemerged as a 1 percent
drop in the euro and weak stocks undermined commodities.
                                
 "As far as industry is concerned, it is a lot quieter today,
which is probably why we have come off again," said Wolfgang
Wrzesniok-Rossbach, head of sales at Heraeus.
                                
 "It looks like people are still unsure about what the investors
are doing," he said. "If ETF holders should start to liquidate some
of their positions because they need cash, (the correction) might not
be over yet."
                                
 The euro fell more than 1 percent to a near four-year low against
the dollar amid concerns about the euro zone's banking system after
the Spanish central bank's takeover of savings bank CajaSur on
Saturday. [FRX/]
                                
 European shares also extended losses to their lowest in nine
months, while U.S. stocks tumbled at the open on Tuesday, on worries
over Europe's banking sector and tensions on the Korean peninsula.
[.EU] [.N]
                                
 U.S. gold futures for June delivery <GCM0> on the COMEX division
of the New York Mercantile Exchange was up $1.5 at $1,195.50 an
ounce.
                                
 "People are going long again with equities that continue to
slide. All equities are bearish at the moment ... it's probably going
to get worse before it gets better," said Standard Bank analyst
Walter de Wet.
                                
 "If gold goes below $1,180 it's definitely a good buy. We think
it's going to head higher and end the year above $1,300."
                                
 Among other commodities, oil fell below $68 a barrel on fears
Europe's debt crisis could derail the global economic recovery.
Industrial metals like copper and aluminium also fell. [O/R] [MET/L]
                                
 HAVEN FROM RISK
                                
 While other assets are suffering from such concerns, gold is
taking support from demand for the metal as a haven from risk.
                                
 The world's largest gold-backed exchange-traded fund, New York's
SPDR Gold Trust <GLD>, said its holdings rose more than 16 tonnes to
a record 1,236.889 tonnes as of May 24. [GOL/SPDR]
                                
 "Global (ETF) holdings have grown by 3.63 million ounces so far
this month, by far the largest monthly increase this year," said UBS
analyst Edel Tully in a note.
                                
 "With four US trading days remaining in the month, it's very
probable that May's ETF demand will outpace that of last October."
                                
 A Reuters poll of analysts, traders and fund managers found on
Tuesday the majority expect gold to resume its uptrend, with 21 out
of 26 respondents predicting the metal will end the year at record
levels. [PREC/POLL]
                                
 Silver <XAG=> was bid at $17.76 an ounce versus $17.82.
 (Additional reporting by Maytaal Angel;
Edited by Sofina Mirza-Reid)