* Gold rallies despite stock mkt gains, ends 8 days of
losses
* Rise lacks momentum as investors seek other assets
By Miho Yoshikawa
TOKYO, March 5 (Reuters) - Gold staged a modest bounce on
Thursday after falling for eight days to a three-week low, but
the rally lacked strength as the metal's safe-haven appeal
appears to have waned in the wake of a rise in equities.
Analysts said investors were looking elsewhere to place
their money including the stock market after U.S. shares
snapped a five-day losing streak on Wednesday on hopes for a
economic stimulus in China.
The dollar's rise against the euro in anticipation that the
European Central Bank would cut interest rates later in the day
was also steering investors away from gold.
"Given that we are seeing a relatively strong rally in the
Dow overnight ... there is probably less of a need for
defensive buying of gold," said Darren Heathcote of Investec
Australia.
He said gold's attraction as a safe-haven asset, the
metal's primary appeal at a time of economic crisis, seemed to
have lost a touch of its sheen for the time being.
Spot gold <XAU=> was at $912.50 an ounce at 0254 GMT, up
0.6 percent from its notional close on Wednesday, when it fell
as low as $900.95, the lowest since Feb. 10.
Prices have fallen about 9 percent since they hit an
11-month high of $1,005.40 on Feb. 20, not far from the record
of $1,030.80 marked last March.
Hopes for Chinese spending on infrastructure also pushed up
Japan's Nikkei average <>, which ended morning trade up
2.7 percent. []
China's Premier Wen Jiabao said on Thursday that China will
achieve 8 percent growth this year despite a deepening
financial crisis, as he set out export support and spending
programme to shore up the economy. []
Traders also noted that the firmer dollar would also work
against gold, as bullion is often bought as a currency hedge,
though the relationship has not been so strong in recent
sessions.
"That (dollar strength) is going to put a bit of weight on
gold," said Adrian Koh of Philip Futures.
The euro inched down against the dollar and the yen on
Thursday as investors expected the European Central Bank to cut
interest rates later in the day to help the sinking euro zone
economy. []
Although market participants expect gold to stage a strong
rally in the long term, they believe it will move around
current levels in the near future.
"We'll probably hang around closer to $900 for the time
being," Heathcote said.
Growth in gold-backed exchange-traded funds has also
slowed, which traders said underscored falling interest in the
metal.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings remained at a record
1,029.29 tonnes on March 4, unchanged from Feb. 26 when they
first hit that level. []
Precious metals prices at 025 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 912.20 5.30 +0.58 3.64
Spot Silver 13.04 0.14 +1.09 15.19
Spot Platinum 1057.00 11.00 +1.05 13.41
Spot Palladium 197.50 1.50 +0.77 7.05
TOCOM Gold 2928.00 -2.00 -0.07 13.80
22662
TOCOM Platinum 3371.00 34.00 +1.02 27.11
7656
TOCOM Silver 411.70 7.80 +1.93 28.94
224
TOCOM Palladium 645.00 30.00 +4.88 17.27
253
Euro/Dollar 1.2590
Dollar/Yen 99.17
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
Spot prices in $ per ounce, TOCOM prices in yen per gram
(Editing by Ben Tan)
