May 10 (Bloomberg) -- Gold rose for a third day in New York as concern about Europe's debt woes spurred demand for precious metals as a protection of wealth. Silver gained.

Standard & Poor's yesterday downgraded Greece's credit rating for the fourth time since April 2010, rekindling concern the region's debt crisis is escalating. Silver extended its rebound after dropping into a bear market last week.

"Economic uncertainties in the monetary union and fears over peripheral debt were returning to the focus yet again," Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report to clients. "In the short run, bullion is likely to remain well supported, also helped by physical activity picking up in Asia amid seasonal demand."

Gold for June delivery rose $12.80, or 0.9 percent, to $1,516 an ounce by 7:57 a.m. on the Comex in New York. Prices declined 4.2 percent last week after climbing to a record $1,577.40 on May 2. Immediate-delivery gold was 0.2 percent higher at $1,516.50 in London.

Bullion rose to $1,517.25 an ounce in the morning "fixing" in London, used by some mining companies to sell output, from $1,502 at yesterday's afternoon fixing. Spot prices have gained the past 10 years, the longest run of gains since at least 1920 in London.

S&P lowered Greece's credit rating to B from BB- yesterday, saying that further reductions are possible. Another cut would make Greece the lowest-rated nation in Europe. European Central Bank Executive Board member Lorenzo Bini Smaghi said allowing a euro-area member state to default on or restructure its debt would create more difficulties than it solves.

Silver Rebounds

Silver futures slumped 27 percent on the Comex last week, the worst weekly drop since at least 1975, as investors sold commodities from oil to copper and exchange owner CME Group Inc. increased the cost of making new speculative positions. The metal slid as much as 34 percent since reaching a 31-year high of $49.845 an ounce on April 25. A bear market is defined by some investors as a decline of 20 percent or more.

Silver for July delivery gained 3.6 percent to $38.46 an ounce on the Comex. The metal for immediate delivery was 1.6 percent higher at $38.4675 in London. Spot prices touched a record $49.79 on April 25.

"The bounce in silver is not too surprising" as there's "a strong market appetite to buy anything on the dip," Mark Pervan, commodity analyst at Australia & New Zealand Banking Group Ltd. in Melbourne, wrote in a note. The downgrading of Greece "reaffirms the reason why investors require the safe- haven support of the precious-metals market."

Silver assets held in exchange traded products fell for a sixth day yesterday, dropping 176.56 metric tons, or 1.2 percent, to a six-month low of 14,191.21 tons, data compiled by Bloomberg show. Gold ETP holdings fell 3.12 tons, or 0.2 percent, to 2,054.64 tons yesterday, data showed.

Palladium for June delivery was up 0.5 percent at $733 an ounce. Platinum for July delivery gained 0.5 percent to $1,804.90 an ounce.