* Tensions run high in euro zone; Portuguese debt level eyed
* Euro recovers some lost ground but sentiment stays weak
* Gold sales under CBGA total just 20.4 T in pact yr to date
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Dec 1 (Reuters) - Gold rose above $1,390 an ounce in
Europe on Wednesday, and hit record highs in euro and sterling
terms, as concerns over the spread of the euro zone debt crisis
prompted buying of the precious metal as a haven from risk.
While the euro's recovery from 11-week lows versus the
dollar would usually also lend support to the gold price,
safe-haven buying was firmly in the driving seat for the
precious metal, analysts said.
Spot gold <XAU=> was bid at $1,392.09 an ounce at 1021 GMT,
against $1,384.94 late in New York on Tuesday. U.S. gold futures
for December delivery <GCZ0> rose $6.90 an ounce to $1,391.90.
Euro-priced gold <XAUEUR=R> rose to a peak of 1,070.11 euros
an ounce, an all-time high, while gold priced in sterling
<XAUGBP=R> also touched a record 895.05 pounds an ounce.
The euro firmed versus the dollar after falling more than 1
percent the previous day and 7 percent in November, but
sentiment remained fragile in a market waiting to see what
policymakers will do next about euro zone debt. []
"The recovery in euro has been subtle, with more losses
likely in the coming days, as the debt issues haven't abated
yet," said Richcomm Global Services analyst Pradeep Unni. "The
gold-dollar positive correlation is back in place."
While a weaker euro and consequently stronger dollar would
usually weigh on the precious metal, both can rise in times of
extreme risk aversion, as both can be bought as a safe store of
value. This was most clearly seen in the second quarter of 2010.
Investors have appeared to take little solace this week from
an 85 billion euro ($111 billion) bailout plan approved by the
EU on Sunday for beleaguered Ireland. Many fear, after the
bailouts of Ireland and Greece, other euro zone countries may
face problems. []
Standard & Poor's warned on Tuesday it could cut Portugal's
credit ratings if the country's growth prospects weaken further.
Any further signs that debt concerns are spreading are likely to
further undermine the euro, boosting interest in gold.
[]
"(Yesterday's) rally, in step with escalating concerns about
euro zone sovereign debt, marks the first day in the current
round of the debt crisis that gold has behaved convincingly as a
safe haven for those wanting out of the euro," said UBS in a
note.
This, it said, was "possibly due to the speed with which
bond market contagion has spread from Ireland to other highly
indebted euro zone countries".
TURKEY IMPORTS SLIP
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, rose 1.5 tonnes on
Tuesday to 1,286.603 tonnes. They dipped slightly in the month
of November, however. []
Meanwhile gold imports into Turkey slipped to just over 3
tonnes in November from around 9 tonnes in October, the Istanbul
Gold Exchange reported. []
On the supply side of the market, the World Gold Council
reported that bullion sales under the third Central Bank Gold
Agreement have totalled only 20.4 tonnes in the second year of
the pact so far, with the bulk of sales made by the
International Monetary Fund. []
The IMF is not a signatory of the pact, but it is currently
making a series of planned sales under its terms to avoid
disrupting the gold market.
Meanwhile China's Ministry of Industry and Information
Technology said the world's biggest gold miner produced 28.735
tonnes of metal in October, 5.3 percent less than in September
but 9 percent more than in October 2009. []
Among other precious metals, silver <XAG=> was at $28.52 an
ounce against $28.05, while platinum <XPT=> was at $1.671,99 an
ounce versus $1,656 and palladium <XPD=> at $709.47 versus $696.
(Reporting by Jan Harvey; editing by Keiron Henderson)
