* SPDR Gold Trust bullion holdings hit fresh record
* Harmony, Newcrest cut production forecasts
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Jan 22 (Reuters) - Gold edged lower in Europe on
Thursday but interest in physical bullion as a haven from risk,
as investors worry about the global economic outlook, is
supporting the precious metal above $850 an ounce.
Spot gold <XAU=> was quoted at $850.40/852.00 an ounce at
1016 GMT, down from $854.05 an ounce late in New York on
Wednesday.
Investors fretting about the prospects for other asset
prices are buying coins and bars, traders said.
"As in October and November, since the beginning of the week
we have seen strong investor demand for physical gold," said MKS
finance head of trading Afshin Nabavi. "There has been demand
for physical kilobars and coins."
Interest in physically backed products such as
exchange-traded funds -- which issue securities backed by
physical stocks of gold -- has soared.
The world's largest bullion-backed ETF, New York's SPDR Gold
Trust, said its holdings rose to a record 805.96 tonnes on
Wednesday. []
On the supply side, the world's fifth largest gold producer,
Harmony Gold <HARJ.J> and Australia's biggest bullion miner,
Newcrest Mining <NCM.AX>, both cut their output forecasts.
Harmony said it now expects production to decline in the
second quarter from the first, after its gold grade decreased.
[]
Newcrest said meanwhile it sees gold output in a range of
1.63-1.7 million ounces in the year to June 30, down from a
previous forecast of 1.68-1.78 million. []
"For the current year, an output of 280-300,000 ounces of
gold is anticipated and 17-18 million ounces of silver," said
Commerzbank analyst Eugen Weinberg in a note.
"Rising gold production in Russia is hardly likely to be
enough, though, to compensate for the lower output in other
major producing countries such as South Africa and Australia."
EXTERNAL DRIVERS
Gold has tracked its main external drivers, oil and the
dollar, less this week as safe-haven buying sparked by fears
over the global economy has taken centre stage.
Gold has "defied the dollar this week" and "divorced from
oil as the financial crisis sees further bank shares collapse",
Fairfax analyst John Meyer said in a daily note.
The dollar slipped a touch against the euro on Wednesday,
reversing earlier gains. A softer dollar tends to support gold,
which can be bought as a hedge against weakness in the U.S.
currency. []
Crude oil, with which bullion typically trades in line, rose
by more than $1 a barrel to above $44, as traders cheered
reports of supply cuts from OPEC members. []
Among other precious metals, silver <XAG=> edged down to
$11.23/11.29 an ounce from $11.31 an ounce.
Platinum remained broadly rangebound, building a base below
$1,000 after sharp falls in the later part of 2008.
Prices plummeted from a high of $2,290 an ounce in March as
investors worried about the outlook for demand from carmakers,
which account for around half of global platinum consumption.
Platinum <XPT=> was at $924/934 an ounce, little changed
from $923.50 late in New York on Wednesday, while palladium
<XPD=> was at $182.50/186.50 an ounce, down from $183.50.
(Reporting by Jan Harvey; Editing by Anthony Barker)
