* Gold hits record in dollars, euro, sterling
* ETF holdings hit all-time highs
* Coming up: FOMC policy decision; 1815 GMT
By Amanda Cooper
LONDON, Aug 9 (Reuters) - Gold hit a record $1,778 an ounce
on Tuesday, in its biggest three-day rally since the depths of
the financial crisis in late 2008, as equities succumbed to
investor fear over the threat to the global economy from the
European and U.S. debt crises.
Gold has risen by about 8 percent this month, driven by
flows of cash out of equities, bonds and currencies, after the
United States lost its top-notch credit rating. Investors have
lost confidence in the ability of European leaders to stem the
spread of the debt crisis that has now engulfed the euro zone's
third- and fourth-largest economies, Italy and Spain.
European stocks lost over 5 percent, higher-yielding
currencies slid, German government bonds and the Swiss franc
rallied as investors ditched anything perceived to be risky.
Spot gold was last at $1,769.90 an ounce at 0930 GMT,
up 3.2 percent on the day, having hit a record $1778.30,
earlier. In the last three days, the price has risen by more
than 7 percent, its biggest move in this timeframe since
"The market could come off from here, but it's headed in a
northerly direction," said ANZ head of metal sales Peter
Hillyard. "From where we are now, you might think we could see
some sort of pull-back. But I'm talking about a momentary thing,
a pull-back like the loading of a gun, which then fires away."
Reflecting the rush into gold, holdings of metal in
exchange-traded funds rose for a twelfth consecutive daily
increase, rising to all-time highs close to 70 million ounces,
or 2,177 tonnes, equivalent about half of total supply in 2010,
based on World Gold Council data.
The European Central Bank bought Italian and Spanish bonds
on Monday to try to stem the spread of the region's debt crisis,
but in doing so, found itself locked in full-blown conflict with
the German central bank, which feels the ECB should stick to its
mandate of fighting inflation.
Gold priced in euros hit an all-time peak above
1,240 euros an ounce and was set for its biggest two-day rally
since May last year when the euro zone debt crisis first flared,
while gold in sterling and yen also hit
The euro itself took heart from the ECB's efforts,
rallying 0.4 percent against the dollar, but held near record
lows against the safe-haven Swiss franc .
Global equities were down by over 1.0
percent, having fallen by 14.5 percent so far in August and set
for their worst monthly performance since late 2008.
"The stock market is plummeting, that is pretty much the
only story out there. Bond yields are down and obviously there
is the flight-to-safety argument," said RBS analyst Daniel
Gold's upward progress has attracted some profit-taking from
investors who have scrambled to plug holes in their portfolio
from the rout across the stock markets.
Top asset manager BlackRock will use profits it is
making in gold and bond markets to seek out bargains in falling
global equity markets, James Holt, investment strategist at the
world's largest money manager, said on Tuesday.
However, analysts said that the current push into gold
appeared to be fairly solid.
"... the ingredients are all in place for a stronger gold
price, as the metal is not subject to the risk of intervention
or quantitative easing," said UBS strategist Edel Tully in a
"This doesn't mean that pullbacks won't occur, and though
some of these may be severe, we believe dips will be bought.
Comex net longs may be at record levels, but current gold buying
is very broad-based, with a strong physical bias which provides
much support," she added.
In other precious metals, silver fell 1.7 percent on
the day to $38.21 an ounce, pushing the gold/silver ratio to
46.0, a six-month high in the outperformance of gold versus
Platinum rose 0.7 percent to $1,723.49 an ounce,
while palladium rose 1.3 percent to $724.22.
Of vital importance to markets later in the day will be the
outcome of the meeting of the U.S. Federal Reserve's
policy-setting committee, which many hope will signal its
intention to support the economy and restore some stability to
(Reporting by Amanda Cooper; Editing by Alison Birrane)
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