* Gold bounces as equities cede gains
* Investment demand flags, adds to weak jewellery demand
* CBGA sales only 80 T so far in pact's fifth year-WGC
(Recasts, adds comment, updates prices)
By Jan Harvey and Paul Lauener
LONDON, March 11 (Reuters) - Gold bounced above $900 an
ounce on Wednesday as bargain hunters entered the fray after
equities fell on lack of detail about plans to support the
banking system in the United States.
Spot gold rose to $907.00/908.20 an ounce at 1638 GMT from
$895.80 late in New York on Tuesday, when it fell about $25 an
ounce as equities rose.
Stock markets took heart after U.S. Treasury Secretary
Timothy Geithner said he would move quickly to establish details
about a plan to mop up banks' toxic assets.
But so far, no details have been given and equity markets,
fearing the worst, have fallen. [] []
"Gold has risen as the rally in U.S. equities peters out,"
said David Thurtell, analyst at Citigroup. "Some investors
undoubtedly see prices below $900 an ounce as cheap."
A weaker U.S. currency, which makes metals priced in dollars
cheaper for holders of other currencies also helped boost the
precious metal. []
Investors use gold as an alterntive currency to the dollar,
when it is falling.
Financial market turbulence and instability have seen many
investors pile into gold-backed exchange traded funds in recent
months, but recent data shows it may have have tailed off.
Holdings of the SPDR Gold Trust <GLD>, the world's biggest
gold ETF, were unchanged at 1,028.99 tonnes on Tuesday.
SPDR's holdings 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 ETF buying 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.
SCRAP RISES
Falling demand for gold jewellery is also expected to cap
prices, analysts said.
Jewellery buying -- a major source of gold demand -- has
been sluggish in recent months as prices hold near $900,
especially in India. Supply of gold scrap from Turkey, the
Middle East and Asia is also rising.
In other 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 edged up to $1,044/1,054 an ounce from
$1,039.50 on Tuesday. 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 stayed steady at $195/200 an ounce from
$195.50, while spot silver firmed to $12.80/12.87 an ounce from
$12.57.
(additional reporting by Pratima Desai)
(Editing by Peter Blackburn)
