* Gold rises to $900/oz; equities limits gains
* Easing gold investment adds to sluggish jewellery sales
* CBGA sales only 80 T so far in pact's fifth year-WGC
(Updates prices)
By Jan Harvey and Paul Lauener
LONDON, March 11 (Reuters) - Gold rose to around the $900
mark on Wednesday as bargain hunters cashed in on yesterday's
losses but equity gains damaged gold's appeal as a safe haven
investment and capped gains.
Spot gold <XAU=> rose to $899.20/200.80 an ounce at 1316 GMT
from $895.80 late in New York on Tuesday. It fell around $25 an
ounce in that session as world markets gained.
"Positive sentiment in the market will mean people moving
out of their safe haven trades as such and I think that's just
going to weigh on (gold)," said Saxo Bank's head of futures and
options Alan Plaugmann.
Both the MSCI world index <.MIWD00000PUS> and the
FTSEurofirst300 <> were up by around one percent by early
afternoon trading, with merger and acquisition news boosting
automobile stocks in Europe. []
Expectations Washington will relieve banks of money-losing
assets is restoring U.S. confidence. []
Strong demand from investors for products like
bullion-backed exchange-traded funds offset falling jewellery
demand earlier in the year, but this is now stalling.
Holdings of the SPDR Gold Trust <GLD>, the world's biggest
gold ETF, were unchanged on Tuesday. Its stocks have increased
by less than five tonnes in the last three weeks, compared to
around 200 tonnes in the first six weeks of 2009. []
"It's becoming evident that the buying in ETFs may have been
led by a small group of hedge funds, whose actions can be
incredibly difficult to predict," said MF Global analyst Tom
Pawlicki.
Jewellery buying -- the main source of gold demand -- is
also sluggish as prices hold near $900, especially in gold's
traditional main markets such as India. Supply of gold scrap
from Turkey, the Middle East and Asia is also rising.
FLIGHT
The dollar strengthened against most major currencies early
on Wednesday as a slump in China's exports in February sparked a
flight to safety before paring gains as equity markets later
picked up. []
While a firmer dollar usually pressures gold -- which is
bought as an alternative to the U.S. currency -- the two assets
are moving together at present as both react to risk aversion.
In supply news, the World Gold Council said signatories to
the Central Bank Gold Agreement -- which include a number of
European central banks and the IMF -- have sold only 80 tonnes
of gold since the pact entered its fifth year in late September.
Under the terms of the agreement, the banks can sell up to
500 tonnes of gold per year. []
"Unless the pace of official sector sales increases
significantly, the CBGA will undershoot the 500-tonne quota by
an even wider margin than it did last year," said HSBC analyst
James Steel.
"Reduced central bank sales are among the most notable
bullish factors in the market," he said.
Spot platinum <XPT=> edged up to $1,047/1,055 an ounce from
$1,039.50. The metal, primarily bought by industrial users, has
been suffering from expectations a recession will weigh heavily
on demand.
"It is too early for optimism about a substantial rise in
jewellery and autocatalyst demand," said Standard Bank.
Spot palladium <XPD=> stayed steady at $194.50/199.50 an
ounce from $195.50, while spot silver <XAG=> firmed to
$12.65/12.72 an ounce from $12.57.
(Reporting by Jan Harvey and Paul Lauener; editing by William
Hardy)
