* Gold rises to four-month high of $974.65
* Financial turmoil fears, stocks losses boost gold
* ETF holdings climb to a record
(Recasts, updates with analyst comments, market activity,
closing prices, adds NEW YORK to dateline)
By Frank Tang and David Sheppard
NEW YORK/LONDON, July 14 (Reuters) - Gold ended above $970
an ounce on Monday, trading at its highest level in nearly four
months as lingering fears of financial market instability and
rising inflation boosted buying of the metal for its safe-haven
appeal.
Spot gold <XAU=> climbed to $971.20/972.20 by New York's
last quote at 2:15 p.m. EDT (1815 GMT) an ounce -- the highest
level since March 19 -- from $963.00/965.00 late in New York on
Friday.
Gold has soared since fears over the future of U.S. mortgage
firms Fannie Mae <FNM.N> and Freddie Mac <FRE.N> came to the
fore on Friday, dragging down equities and the dollar.
U.S. stocks slipped on Monday as investors worried that
plans to shore up the government sponsored mortgage companies
won't be enough to allay concerns about the fallout from the
housing slump in the world's biggest economy. []
"The issue of Fannie May and Freddie Mac's stability
definitely brought the fear factor back," said Daniel Hynes,
metals strategist at Merrill Lynch.
"A month ago, gold looked like it might have struggled to
get back towards $1,000 but it now looks like it could be
heading back towards those levels."
Gold dipped earlier on Monday after a firmer tone in the
U.S. dollar encouraged pockets of profit-taking. However, the
dollar later retreated as stocks fell. []
Oil prices above $146 a barrel were also supporting gold, as
many investors use the precious metal to hedge against fuel-led
inflation. U.S. crude futures <CLc1> ended up 10 cents at
$145.18 a barrel. []
HEIGHTENED RISK
Bullion held by the New York-based SPDR Gold Trust <GLD.P>
<GLD.A>, the world's largest gold-backed exchange-traded fund,
jumped to a historic high of 705.90 tonnes on Friday amid
nervousness over Fannie Mae and Freddie Mac.
U.S. gold futures <GCQ8> for August delivery settled up
$13.10, or 1.4 percent, at $973.70 an ounce on the COMEX
division of New York Mercantile Exchange.
George Gero, vice president at RBC Capital Markets Global
Futures, said that a swift rollover to December futures from
August contracts and a big open interest were bullish signs.
Investment bank UBS on Monday raised its short-term gold
price forecast to $1,000 an ounce over the next month, against a
previous forecast for $900, citing heightened risk aversion and
ETF holdings. []
Adam Sarhan, founder of Florida-based TheSarhanAnalysis.com,
said that gold broke above its downward sloping trendline at the
beginning of the third quarter, and that triggered a technical
"buy" signal.
Gold hit a record above $1,000 per ounce in March on a
combination of historic dollar weakness, rising oil prices and
widespread financial market fears in the wake of the near
collapse of Bear Stearns.
Commerzbank trader Michael Kempinski said gold could be
heading back toward $1,000 an ounce.
"The general direction is to the upside at the moment, with
the dollar still weak, oil at record highs and safe haven buying
increasing. We see resistance at $990, but if oil continues to
move higher I see it pushing through."
However, slowing physical demand from jewelers in response
to higher prices continues to weigh on gold, with Turkish gold
exports on Monday reported to have fallen by 25.5 percent to 5.8
tonnes in June.
Spot platinum <XPT=> fell to $2,012.00/2,032.00 an ounce
from its previous finish at $2,023.00/2,043.00 in New York on
Friday. Spot palladium <XPD=> held unchanged from its late
Friday New York close at $448.50/456.50 an ounce.
Silver <XAG=> tracked gold higher at $19.14/19.21 an ounce
from $18.76/18.84 late in New York on Friday.
(Editing by Matthew Lewis)
