* Wall St rally, better economic sentiment pressure gold
* Platinum boosted after Johnson Matthey report
* London, Swiss platinum ETF holdings fell last week
(Recasts, updates with closing prices, new details, adds NEW
YORK to dateline)
By Frank Tang and Rebekah Curtis
NEW YORK/LONDON, May 18 (Reuters) - Gold prices fell 1
percent on Monday as Wall Street rallied, denting the precious
metal's appeal as a safe haven from volatility in other markets
amid a global recession.
Nonetheless, prices are within sight of the seven-week high
reached on Friday, with analysts expecting concerns about
inflation and the economy to underpin the precious metal's
credentials as a hedge against uncertainty.
Platinum rose after refiner Johnson Matthey released its
influential annual report which said expectations of strong
Chinese jewellery demand could boost prices, but weak auto
usage will still weigh on prices. []
Spot gold <XAU=> traded at $921.55 an ounce at 3:07 p.m.
EDT (1907 GMT), down 1 percent from its late Friday quote of
$930.70 late in New York on Friday.
U.S. gold futures for June delivery <GCM9> settled down
$9.60, or 1 percent, at $921.70 an ounce on the COMEX division
of the New York Mercantile Exchange.
A 2.5 percent rally in the S&P 500 index eroded gold market
sentiment, traders said. []
"Gold is tracking equities inversely," said Citigroup
analyst David Thurtell. The relationship between the two was
"holding solidly for now," he said, "and is likely to do so
while confidence is still fragile."
However, analysts said the impact of firmer equities was
likely to be brief. Gold is still within reach of the high of
$933.65 it hit on Friday, its highest price in seven weeks,
after data showed U.S. core inflation in April rose more than
expected.
"The outlook for gold is a lot better than the outlook for
the U.S. economy," said Charles Kernot, a mining analyst at
Evolution Securities. "There is still a lot of uncertainty in
terms of the outlook for the global economy ... People are now
looking at it being a much slower recovery (than expected)."
Traders said rising oil prices <CLc1>, which could feed an
inflation spiral, would help bolster gold market sentiment.
U.S. crude futures rallied to less than $1 away from the $60
per barrel mark. []
PLATINUM WEEK
Platinum slipped briefly after Johnson Matthey gave a
wide-ranging price forecast in its annual report, saying prices
could move between $950 and $1,350 over the next six months.
[]
The report is the centerpiece of the annual gathering of
leading figures in the platinum industry for the annual
Platinum Week event in London this week. []
Platinum <XPT=> was at $1,129 an ounce, up 2.6 percent from
its late Friday quote of $1,100.50 an ounce in New York.
Platinum group metals languished in 2008 due to problems in the
auto sector.
Total demand from automakers for platinum catalytic
converters dropped nearly 10 percent last year, underscoring
slumping U.S. vehicle production amid a global recession.
[]
Johnson Matthey said demand from the auto sector, a major
platinum user accounting for 60 percent of total demand, and
from the glass and chemical industries was set to decline this
year as the economic downturn persists.
An anticipated bankruptcy filing by General Motors Corp
<GM.N> by the end of May, however, should not drastically dent
platinum autocatalyst demand unless the car industry slashes
production further from its current dismal level, analysts say.
[]
Platinum's auto industry demand posted a decline for the
first time since 1999.
Speaking to Reuters on Monday, Anglo Platinum <AMSJ.J>
Chief Executive Neville Nicolau said he expects the company to
at least break even this year, and stuck to the company's
annual production target of 2.4 million ounces. []
Palladium <XPD=> was at $225.50 an ounce, up 1.4 percent
from its previous finish of $222.50, while silver <XAG=> was at
$13.80 an ounce, down 0.9 percent from its previous finish of
$13.93.
Johnson Matthey said palladium sales from Russian state
stockpiles could keep the market in surplus for at least
another year. []
Platinum ETFs reported outflows last week after a period of
relative stability. Holdings of ETF Securities' Physical
Platinum fund <PHPT.L> dipped 13.6 percent in the week to
Friday, while Zurich Cantonal Bank said its platinum ETF
<ZPLA.S> holdings edged down to 170,247. []
(Additional reporting by Jan Harvey and Pratima Desai)
