SINGAPORE - Gold bounced from lows, with bullion priced in euro striking a record after the single currency slumped, but trade was likely to remain erratic as investors watch currencies gyrate.
Dealers shrugged off the first decline in holdings on the SPDR Gold Trust in a month and a half, saying mounting worries about the euro zone's debt problems meant there was no change in bullion's safe-haven appeal.
Spot gold was at $US1,218.10 ($A1,489.67) an ounce by 1247 AEST, up 10 cents from New York's notional close on Friday, when the metal hit its weakest since May 25 around $US1,196.
Gold priced in euros struck a record around 1,022 euro after the single currency plunged to its lowest in more than four years against the US dollar. In dollar terms gold is about 2.4 per cent below a record hit in May.
"There is speculation that the European debt crisis has spread from western Europe to eastern Europe," Phillip Futures investment analyst Wong Eng Soon said from Singapore.
"Fears will definitely cause people to be more optimistic on gold. It's very clear that US dollar and gold are the preferred safe-haven holdings."
Hungary's government said on Saturday it aimed to meet this year's budget deficit target, seeking to draw a line under "exaggerated" talk of a possible Greek-style debt crisis that has unnerved global markets.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings totalled 1,286.359 tonnes as of June 4, down from 1,289.839 tonnes previously.
"In our view, the strategy in an environment of currency devaluation and weak growth is to consider the benefits of real tangible assets as an effective store of wealth," said Mathew Kaleel, who heads commodities fund manager H3 Global Advisors in Sydney.
"And indirect currencies such as gold, which should continue to perform well if current conditions persist."
The euro plunged to four-year lows and stock markets dropped after disappointing US job data cast doubt on the strength of its economic recovery and as Hungary's debt problems spurred investors to dump riskier assets.
US gold futures for August delivery added $US2.1 an ounce to $US1,219.8 an ounce after hitting a low around $US1,216.
"Gold is going to be choppy for a while, waiting for data coming out of the United States," a dealer in Hong Kong said.
"There's a drop in SPDR holdings but the amount is small. But we've got to see if it will continue falling. If it dropped by 10 to 20 tonnes, people will be worried."
Oil fell nearly two per cent, extending the previous session's steep decline, dragged lower by the disappointing US jobs data and worries about Hungary.
