Gold rose to $1,235 an ounce in Europe on Thursday, benefiting from concern over euro zone sovereign debt and its impact on the wider economy, which prompted investors to cut their exposure to riskier assets.Spot gold was bid at $1,235.75 an ounce at 1136 GMT, against $1,229.60 late in New York on Wednesday. U.S. gold futures for August delivery rose $6.60 to $1,237.10.Gold has risen as much as 14 percent since the start of the year, spiking to a record high at $1,251.20 an ounce last week alongside concerns sovereign debt issues will damage the euro."Many people missed it to buy, as it was moving up too fast," Commerzbank senior trader Michael Kempinski said. "Physical demand slowed down, but people are buying the dip. I'm quite optimistic for gold, especially gold in euros."Kempinski said investors were buying gold as an alternative to all paper currencies.The concern investors have about some debt-laden euro zone economies, such as Spain, has not receded.The premium bond holders demand to own 10-year Spanish government debt over benchmark German bunds hit a euro lifetime high on Thursday, although an auction of Spanish 10-year bonds attracted good demand."Uncertainty still looms over the euro zone sovereign debt issues," said VTB Capital's Andrey Kryuchenkov in a note.The euro hit a three-week high against the dollar after the Spanish auction soothed some fears about the country's public finances.The auction also helped propel European shares towards their seventh consecutive daily rise, driven by a rally in bank shares and by BP , which said it would set up a $20 billion fund for damage claims stemming from its Gulf of Mexico oil spill.Industrial commodities weakened, with copper and nickel falling more than 2 percent and oil sliding as the pace of demand growth was questioned following mixed economic and inventory data from top consumer the United States.EU SUMMIT, U.S. INFLATION DATA EYEDThe markets are awaiting a raft of U.S. economic data due later in the session, including the May consumer price index reading and May real earnings numbers at 1230 GMT.They are also eyeing the outcome of a summit of European Union leaders in Brussels on Thursday, at which economic governance will be discussed."We will prepare for the G20 and G8 meetings so that we can go with as united a European position as possible that also covers a bank levy and the taxation of financial markets," said German Chancellor Angela Merkel ahead of the meeting.Interest in physical gold as an investment product kept holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust , at a record above 1,306 tonnes on Wednesday.Among other precious metals, silver was bid at $18.46 an ounce against $18.40.The ratio of gold to silver, or the number of ounces of silver needed to buy an ounce of gold, rose to above 67 from the two-week low of 66.7 it hit in the previous session as silver succumbed to weakness in other industrial metals.While it is often seen as an investment metal, as a cheaper alternative to gold, silver is mainly used in industry.Platinum was at $1,568.50 an ounce against $1,566.50, while palladium was at $471.50 against $471."Both have run into profit taking this morning as a result of the weaker tone in industrial metals, although clearance of chart resistance at $1,572/$471 this week could draw dip buying interest," said James Moore, an analyst at TheBullionDesk.com, in a note.(Additional reporting by Amanda Cooper; editing by Sue Thomas)News posted by www.newsinfoline.com
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