* Gold expected to make fresh assault on $1,000/OZ
* Inflation fears recede
* Scrap could overwhelm physical demand
(Recasts, adds comment/detail, pvs Tokyo)
By Pratima Desai
LONDON, Feb 26 (Reuters) - Gold slid on Thursday in volatile
trade to its lowest level in more than a week, but analysts said
the fallback could encourage further buying by investors looking
for a safe place to park their assets.
Spot gold <XAU=> fell to $941.20 an ounce, the lowest since
February 17. It was at $944.10/946.10 an ounce at 0958 GMT
compared with $952.10 late in New York on Wednesday.
"It will make a fresh assault on 1,000...the pullback is an
opportunity," said Nick Moore, commodity strategist at RBS
Global Banking & Markets.
"Fundamentally the supply of gold has been severely
constrained over the past decade and look at the barren hostile
investment wasteland."
Investors have been piling into gold investments since last
October as the financial crisis escalated after the collapse of
Lehman Brothers. []
Fears that the massive amounts of money being pumped into
the global economy by central banks and governments will
eventually result in spiralling inflation have been another
reason for investors to buy gold.
However, analysts say demand may remain subdued for a while
after U.S. Federal Reserve Chairman Ben Bernanke said he had a
strategy to keep inflation under control as the economy
recovers. []
"If investors continue to believe that the authorities can
support the banking system, short of nationalization, and that
inflationary pressures will remain subdued, the path for gold is
likely to be lower," HSBC said in a note.
Gold prices hit an 11-month high of $1,005.40 an ounce on
Friday, not far from the record high of $1,030.80 an ounce hit
last March.
Prices have been boosted by buying for exchange traded
gold-backed funds, the biggest of which is the SPDR Gold Trust
<GLD>. SPDR's holdings hit a record above 1,028 tonnes last
week, but since then have remain unchanged.
"If gold doesn't gain momentum soon, it could see a larger
downward correction, as scrap could overwhelm physical demand at
current price levels," Standard Bank said in a note.
Analysts said the firmer dollar against the euro <EUR=> will
also weigh on precious metals market sentiment in Europe. A
higher U.S. currency makes metals priced in dollars more
expensive for holders of other currencies. []
Spot silver <XAG=> was at $13.35/13.45 an ounce from $13.69.
Earlier it touched a two-week low of $13.35 an ounce.
"The ... outlook for (silver) remains weak particularly in
light of falling industrial demand stretching the market into a
wider surplus," Barclays Capital said in a note.
Platinum <XPT=> also a precious industrial metal was at
$1,041/1,049 an ounce from $1,044 on Wednesday. The metal used
in autocatalysts to clean car emissions has been battered
alongside auto sales.
Palladium <XPD=> was at $196/200 from $195.50.
(Reporting by Pratima Desai; editing by Keiron Henderson)
