* Bullion prices hit highest since July 22
* Gold hits record in many currencies including euro
* Russian central bank says plans to continue buying gold
(Releads, updates with New York prices, comment, late
bullion prices)
By Carole Vaporean and Jan Harvey
NEW YORK/LONDON, Feb 17 (Reuters) - Gold hit a fresh
seven-month high on Tuesday after a slew of negative reports
including warnings of deterioration in Eastern Europe, Japan's
shrinking economy, and sinking U.S. manufacturing activity,
drove investors to safe-haven investments.
"What you're seeing is another round of safe-haven buying
in gold. Today, another round of concerns in the banking
industry and in the global economy," said David Meger, metals
analyst at Alaron Trading in Chicago.
Spot gold <XAU=> rose to $969.35/$971.35 an ounce at 2012
GMT from $940.90 in New York late on Monday. It touched a high
of $973.20 an ounce, its firmest since July 22.
In New York, gold for April delivery <GCJ9> surged $25.30
or 2.7 percent to finish at $967.50 an ounce on the COMEX
division of the New York Mercantile Exchange.
During the session, gold futures rallied to their highest
level in seven months at $974.90 an ounce.
Fears over a deepening recession in Eastern Europe sent the
metal to record highs in a raft of currencies -- including the
euro, sterling, the South African rand, the Indian rupee and
the Canadian and Australian dollars.
"We are seeing complete risk aversion, with equities
selling off and the dollar rising," said VTB Capital analyst
Andrey Kryuchenkov. "Investment demand is rising for gold."
Credit rating agency Moody's Investor Service threatened to
downgrade eurozone banks with significant exposure to
deteriorating economies in Eastern Europe. []
Standard & Poor's also said it may review emerging Europe
bank ratings now that the credit crisis has limited western
European banks' ability to fund subsidiaries in the region.
"Gold is the asset of choice right now and given renewed
concerns about Eastern Europe and (with the) banking sector
again under pressure, investors are looking at gold," said
James Moore, an analyst at The BullionDesk.com.
Fears over the outlook for the economy worsened after a
survey showed manufacturing production in New York state fell
to a record low in February. []
Wall Street stocks tumbled on concern the recession is
worsening, taking the benchmark S&P 500 below the 800 level for
the first time since Nov. 21. []
While investment in products like gold-backed exchange
traded funds has soared as investors seek a safe place for
their cash, high prices are hurting jewellery demand in key
centres of gold buying, India, China and the Middle East.
The benchmark April gold contract traded in India <MAUJ9>
peaked at 15,379 rupees per 10 grams, boosted by safe haven
buying and a weak rupee.
Alexei Ulyukayev, deputy chairman of Russia's central bank,
told Reuters the bank had increased gold's share of its
reserves, and planned to continue doing so this year. "We are
buying gold," he said. []
UBS strategist John Reade said he expected the bank would
make purchases from domestic producers.
"We expect slow and steady accumulation from the CBR in
coming years and do not expect Russia to start buying gold in
the international OTC market," Reade said.
Among other precious metals, swept up by the lust for gold,
spot silver <XAG=> climbed to a six month high of $14.07 an
ounce, and was later quoted at $13.90 an ounce in late New York
business, up from $13.60 on Friday.
Spot platinum <XPT=> firmed to $1,090.50/$1,093.50 an ounce
from $1,063 previously. The fundamentals for the metal remain
weak, with demand from carmakers -- the major users of the
platinum group metals -- severely hit by the recession in the
United States.
Spot palladium <XPD=> hit a three-month high of $218.50 an
ounce, before easing back to $216.0 an ounce, up from Friday's
$213.50.
The metal has been supported by buying for palladium-backed
ETFs, on the perception that the metal is cheap compared to its
peers.
(Editing by Marguerita Choy)
