* Equities slip at the U.S. open
* SPDR ETF holdings rise to record on Feb. 11
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By Paul Lauener and Jan Harvey
LONDON, March 12 (Reuters) - Gold jumped more than 2 percent
on Thursday as stock market weakness boosted the metal's appeal
as a haven from risk and holdings of the world's largest
gold-backed exchange-traded fund hit a record.
Spot gold <XAU=> was $925.25/927.25 an ounce at 1355 GMT
from $906.65 late in New York on Wednesday. Earlier, it touched
a high of $930.45.
Buying of gold and gold-backed ETFs on the back of stock
market weakness pushed the precious metal through technical
resistance around $920 an ounce, analysts said.
"I think gold can get to $935 in the next few days,"
Citigroup analyst David Thurtell said.
U.S. stocks weakened at the open, reflecting losses
throughout the morning in Europe. Gold has recently served as a
haven from weak equities and financial sector instability.
The world's largest gold-backed ETF, the SPDR Gold Trust
<GLD>, said its holdings hit a record 1,038.17 tonnes on
Wednesday, fuelling expectations investor demand will remain
strong. []
Gold briefly pared gains in the wake of better-than-expected
U.S. retail sales data, which led U.S. stock futures to turn
positive. But the strength of consumer spending may now be
fuelling fears over inflation.
"We could see some kind of inflation return to the market,
whether it's in commodities or consumer and producer prices,"
Altavest analyst Tom Hartmann said.
"A long-term concern for a lot of people buying gold is
going to be inflation. There's a huge amount of money that's
been pushed into circulation by the government and it may all
rush toward the market at some point."
The dollar firmed against the euro. []
While a stronger dollar usually pressures gold, which is
typically bought as an alternative to the currency, both assets
are now moving in the same direction as they take their cues
from risk aversion.
PRODUCTION DROPS
In production news, South African gold output fell 8.7
percent in volume terms and total mineral production dropped 11
percent in January compared with the same month in the previous
year [].
The country is the world's second-biggest gold producer
after China.
Broker Numis Securities cited falling mine supply, along
with risk aversion, physical bullion demand, and the prospect of
rising inflation and a weaker dollar, as behind a decision to
raise its 2009 gold price forecast to $900 an ounce from $700.
[]
Metals consultancy GFMS said the rate of producer de-hedging
-- in which miners buy back gold they had previously sold
forward to regain exposure to rising prices -- slowed in the
fourth quarter of 2008 and will decrease further this year.
Dehedging was a major source of gold demand in recent years,
but the rate of activity has slowed naturally as the global
hedgebook has diminished. []
"Higher gold prices tend to make miners keen to dehedge
historic gold positions, but the expense of the dehedging can
also dissuade miners from taking the pain," Fairfax analyst John
Meyer said.
He said many miners preferred to wait for a pull-back in
gold prices before closing out further forward sales.
Among other precious metals, spot silver <XAG=> was at
$12.95/13.02 an ounce against $12.75 late in New York on
Wednesday.
Spot platinum <XPT=> edged up to $1,052/1,062 an ounce
against $1,050, while spot palladium <XPD=> was a touch firmer
at $196/201 an ounce against $195.
(Editing by Sue Thomas)
