* Equities weaken in Europe, Asia; gold gains
* Traders eye ECB rate decision, but cut priced in
* SPDR gold ETF holdings remain static
(Updates throughout, changes dateline - pvs TOKYO)
By Jan Harvey
LONDON, March 5 (Reuters) - Gold ticked higher in Europe on
Thursday, recovering from the previous session's 1 percent fall,
as equity markets declined, boosting the metal's appeal as an
alternative investment.
Spot gold <XAU=> firmed to $911.40/912.40 an ounce at 1030
GMT from $906.90 late in New York on Wednesday.
Gold remains in a consolidation phase as investors consider
the outlook for other markets. The fear that drove the metal
above $1,000 an ounce in February has been easing, analysts say.
"While we have seen safe-haven buying as the key driver in
the last few weeks, that is clearly dropping out of the system,
which has allowed gold to come back (down)," Standard Chartered
analyst Daniel Smith said.
Gold has suffered as appetite for 'riskier' assets such as
equities has picked up. A rebound in the stock markets on
Wednesday knocked gold to a three-week low of $900.95. However,
as stocks fell the precious metal has moved higher.
European shares fell, giving up the previous day's gains,
ahead of interest rates decisions from the European Central Bank
and Bank of England later today.
Asian shares also fell on disappointment that China did not
announce new stimulus plans, also taking some of the downward
pressure off gold. []
Enthusiasm is muted, however, by fears over supply and
demand. A major source of consumption of the yellow metal,
buying for gold-backed exchange-traded funds, has stalled in
recent weeks.
Holdings of the largest, New York's SPDR Gold Trust <GLD>,
remain at 1,029.29 tonnes, static from the level they hit last
Thursday. []
Its holdings have risen only 5 tonnes in the last fortnight,
compared with 205 tonnes in the first six weeks of 2009.
SCRAP
On the supply side, dealers in Asia and the Middle East
report surging inflows of scrap as holders take advantage of
high prices. Turkey imported no gold last month as domestic
supply met needs, and Indian scrap selling is also picking up.
"With scrap sales continuing to be seen and risk appetite
improving the metal will remain vulnerable to further pockets of
liquidation," James Moore, analyst at TheBullionDesk.com, said.
Fresh buying in India has also been lacklustre as high
prices discourage purchases.
Among the external drivers of gold, the dollar firmed versus
the euro ahead of an expected rate cut from the ECB. The bank is
widely seen slicing rates to an all-time low of 1.5 percent from
2 percent and slashing its economic forecasts for 2009 and 2010.
[]
While a stronger dollar typically weighs on gold, which is
often bought as a hedge against weakness in the U.S. currency,
both assets are still reacting chiefly to risk aversion.
Oil prices fell below $45 after surging nearly 9 percent
overnight after government data showed a surprise drop in U.S.
stocks. []
The other precious metals were little changed. Spot silver
<XAG=> edged up to $12.97/13.03 an ounce from $12.90, while spot
palladium <XPD=> was at $196/201 an ounce from $196.
Platinum prices were steady after firming more than 1
percent on Wednesday amid hopes China would ramp up plans to
stimulate the economy. Spot platinum <XPT=> was quoted at
$1,047/1,052 an ounce from $1,046.
(Reporting by Jan Harvey; Editing by Sue Thomas)
