US MIDDAY: gold slips

Gold fell early on Wednesday, as a sharp pullback in global equity markets amid mounting worries that Greece's debt crisis may escalate triggered selling in commodities across the board.
Concerns about a US economic slowdown limited losses after US consumer prices logged their biggest rise in nearly three years in May and a regional factory gauge contracted this month. Uncertainty related to talks on the US debt ceiling also provided underlying support, traders said.
"Yesterday the risk-off trade came off - they sold gold and bought the stock market, but there are still big problems with Greece and here with our debt ceiling," Jonathan Jossen, an independent floor trader in COMEX gold options, said. Spot gold was down 0.2 percent at $1,520 an ounce by 12:33 pm EDT (1633 GMT), having recovered from a session low of $1,513.86. The US August contract fell $3 to $1,521.40 an ounce.
Gold had fallen more sharply earlier when US equities tumbled in opening trade following downbeat US economic data and as the Greek debt crisis escalated.
Spot silver was down 0.2 percent at $35.33 an ounce, about 30 percent below a record high of $49.51 set on April 28. The Reuters-Jefferies CRB commodities index dropped 1.5 percent, poised for its largest loss in three weeks as crude oil slid 2 percent and the dollar index rallied 1.6 percent.
Safe-haven buying emerged after Greek Prime Minister George Papandreou proposed forming a national unity government on condition it support EU/IMF bailout plans. He offered to step down to facilitate the formation of such an administration. Tens of thousands of angry Greek citizens massed in front of parliament in a sign of rising opposition to austerity, and European officials said a new bailout deal for Athens could be delayed until next month.
"The theme of the European sovereign debt crisis just won't go away and on that basis, there is a limit to how much you want to sell gold at this moment in time," Saxo Bank senior manager Ole Hansen said.
Reflecting investor discontent over the eurozone debt crisis, the euro fell 1.5 percent against the dollar, pushing up the price of gold in euros by nearly 2 percent in its largest one-day rise in almost a month.
"Euro zone - and perhaps soon US - sovereign debt concerns remain critical, there is a lot of liquidity still and China's growing middle class can't get enough of the yellow metal," said David Thurtell, analyst at Citi.