* Gold rebounds as safe haven during stock-market rout
* ETF holdings at record but Q3 gold demand seen weak
* Silver, platinum, palladium drop on economic concerns
* Coming up: U.S. ADP employment data on Wednesday
(Adds details, updates prices to market close)
By Frank Tang
NEW YORK, June 29 (Reuters) - Gold rebounded on Tuesday as a
global rout in equities and sharply lower commodities prompted
investors to pile in amid renewed fears about European credit
contagion.
Fears of a potential liquidity shortfall of more than 100
billion euros in the financial system as European banks repay 442
billion euros ($545.5 billion) in emergency loans sparked the
latest sell-off in equity markets, with the Dow <> losing over
250 points. []
"The longer the stock market stays lower, and with all the
commodities trading weaker, investors who initially just sat
around are now buying gold in a flight to quality," said Adam
Klopfenstein, senior market strategist at MF Global's unit
Lind-Waldock.
(Graphic - http://link.reuters.com/hun72k )
Analysts said risk-averse sentiment benefitted investments
perceived as safer during uncertainty, including U.S. two-year
Treasury notes whose yields fell to the lowest level on record.
[]
Spot gold <XAU=> was at $1,241.15 an ounce at 3:19 p.m. EDT
(1819 GMT), against $1,236.05 late in New York on Monday. Bullion
rebounded after falling toward $1,220 an ounce in early trade,
when investors dumped the metal along with other commodities.
U.S. gold futures for August delivery <GCQ0> settled up $3.80
at $1,242.40.
Weak U.S. June consumer confidence data fueled the stock
market slump. This weighed heavily on assets like stocks, oil and
base metals, though gold, in comparison, remained relatively
resilient. []
VTB Capital analyst Andrey Kryuchenkov said while risk
aversion is still supporting gold, he expects the metal to remain
under pressure from the stronger dollar, losses in other
commodities and weakness in seasonal physical demand.
"I notice that in extreme cases of persistent flight to
safety, (gold and the dollar) trend together, but when matters
calm down and the greenback holds strong, gold corrects a little
with other metals," said Kryuchenkov.
Gold, like other dollar-priced assets, typically weakens as
the U.S. currency firms. Early this year that relationship broke
down as both were lifted by risk aversion, but the usual link is
being reestablished
.
The dollar rose sharply against a basket of currencies <.DXY>
on Tuesday, while the euro hit a lifetime low against the Swiss
franc and an 8-1/2 year low against the yen due to fears over the
expiration of a key euro zone refinancing program this week.
[]
Meanwhile, oil prices fell more than 3 percent to below $76
per barrel as risk appetite dwindled on renewed worries over euro
zone debt, while base metals like copper, lead and zinc slid more
than 4 percent. [] []
The Reuters-Jefferies CRB index <.CRB>, a global commodities
benchmark, hit a two-week low on Tuesday.
SEASONALLY WEAK PERIOD
Investment demand for physical gold continued to support
prices, with holdings of the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust <GLD>, still at a
record high 1,316.177 tonnes on Monday. []
But gold is entering a seasonally weak period for physical
demand, which could undermine any push higher, analysts said.
"June-August are the months in which demand for gold
retreats," said Societe Generale in a note. "Along with the onset
of the vacation period in North America and Europe, the Indian
market slows significantly."
Other precious metals underperformed gold, with silver <XAG=>
easing to $18.48 an ounce against $18.68, platinum <XPT=> to
$1,538.50 an ounce against $1,565, and palladium <XPD=> to $450
against $466.
The platinum market will see a narrower market surplus in 2010
on the back of strong investment interest during the launch of
U.S. platinum-backed exchange traded funds and a recovering auto
industry, commodities consultant CPM Group said in a report.
[]
Prices at 3:24 p.m. EDT (1943 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCQ0> 1242.40 3.80 0.3% 13.3%
US silver <SIN0> 18.594 -0.084 0.0% 10.4%
US platinum <PLN0> 1548.10 -17.50 -1.1% 5.2%
US palladium <PAU0> 454.40 -18.05 -3.8% 11.1%
Gold <XAU=> 1239.75 3.70 0.3% 13.1%
Silver <XAG=> 18.46 -0.22 -1.2% 9.6%
Platinum <XPT=> 1535.50 -29.50 -1.9% 4.8%
Palladium <XPD=> 448.00 -18.00 -3.9% 10.5%
Gold Fix <XAUFIX=> 1234.50 -1.50 -0.1% 11.8%
Silver Fix <XAGFIX=> 18.57 -54.00 -2.8% 9.3%
Platinum Fix <XPTFIX=> 1545.00 3.00 0.2% 5.4%
Palladium Fix <XPDFIX=> 463.00 3.00 0.7% 15.2%
(Additional reporting by Jan Harvey in London; editing by Jim
Marshall)
