* Gold up 3 pct in 3 days, best rally since Jan
* SPDR ETF sees largest one-day inflow since Feb. 2009
* Stocks, commodities bounce back after day-earlier losses
(Updates prices, adds comment. Reledes. Changes byline,
dateline, tagline. Rewrites throughout.)
By Carole Vaporean
NEW YORK, May 26 (Reuters) - Gold rose about 1 percent on
Wednesday, building its best three-day gain since January, as
traders hedged against further euro-zone debt turmoil and drew
support from unabated investor desire for asset protection.
After rallying earlier this week as investors fled riskier
assets in search of safer havens, gold gained in tandem with
equities and industrial commodities on Wednesday, maintaining
this month's rare correlation with the U.S. dollar.
Apart from ongoing credit concerns over some tenuous
European sovereign debt, gold was lifted by news that the
biggest exchange-traded fund had seen its biggest one-day
increase in physical holdings since February 2009, strong
evidence of retail demand for hard assets.
Spot gold <XAU=> rose 0.9 percent or $11.05 to $1211.15 an
ounce by 3.19 p.m. EDT (1919 GMT).
Benchmark U.S. gold futures for June delivery <GCM0> on the
COMEX division of the New York Mercantile Exchange settled
$15.40, or 1.29 percent, higher at $1,213.40 an ounce.
"These days, it tends to move up in general whether the
dollar goes up or not. Gold has been tracking, and moving with,
the dollar for the bulk of 2010," said Rick Bensignor, chief
market strategist at Execution Noble LLC in New York.
"For people who bought the dollar up as a hedge against the
euro's going down, it gave them some reason in a
non-traditional sense of buying gold as asset protection."
The euro <EUR=> fell for a third straight session against
the dollar, hurt by nagging fears over European debt. []
Prices have been recovering after falling about 4.5 percent
last week. Concerns about euro zone sovereign debt sparked
selling of assets seen as higher risk, like stocks and other
commodities. Some investors also sold commodities to increase
their cash positions.
"Once the correction had run its course, buyers felt more
comfortable about jumping in again," said Ole Hansen, senior
manager at Saxo Bank. "ETF holdings still making new highs is
also supporting the move."
Holdings of the world's largest gold exchange-traded fund,
New York's SPDR Gold Trust <GLD>, rose 30.4 tonnes on Tuesday
to a record 1,267.3 tonnes, its biggest one-day inflow since
Feb. 12, 2009. The 108-tonne inflow into the SPDR fund this
month alone is worth some $4.179 billion.
"The combination of factors has seen investors shift money
out of equities and riskier assets, towards the safe havens of
gold and certain government bonds," Standard Bank said in a
research note.
Citing the COMEX August contract <GCQ0>, because the May 28
first notice day for June would force deliveries beyond this
week, Bensignor said, consecutive higher closes above $1,218.60
in the August contract sets up for a bullish move to targets at
$1,270 to $1,300 an ounce sometime in the next month or two.
He emphasized that the consecutive gains would need to
continue to be higher for his outlook to remain in tact.
August gold closed up $15.50 at $1,215.30.
Geopolitical concerns centred on the Korean peninsula,
where tensions are increasing, were also cited by some analysts
as supportive for gold. []
COMMODS, EQUITIES REBOUND
Commodity and equity markets rose as investors bought
shares of beaten-down stocks and metals following recent sharp
losses. [] European equities bounced back from nine-month
lows hit a day earlier, extending gains after U.S. durable
goods data beat expectations. [] []
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For a graphic showing the price performance of various
commodities this year, click on:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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Platinum <XPT=> was up at $1,525 an ounce versus $1,515.50,
palladium <XPD=> rose to $444.00 against $436 and spot silver
<XAG=> increased to $18.20 an ounce against $17.86.
(Additional reporting by Pratima Desai and Jan Harvey; )
