* Spot gold eases as profit taking continues
* SPDR Gold Trust holdings hit new record
* Investors cautious of testing $1,000 mark in near term
By Chikako Mogi
TOKYO, Feb 27 (Reuters) - Gold softened on Friday, after
falling to a two-week low the previous day, as a budget offered
by U.S. President Obama gave a rosier outlook for the economy,
dampening the precious metal's safe-haven appeal.
With their longer-term inflation fears easing slightly,
investors are taking profit, cautious of the market's ability
to rally and hold above the $1,000 level topped a week ago.
Spot gold was quoted at $938.80 per ounce at 0245 GMT, down
0.6 percent from New York's notional close of $944.70 on
Thursday, and also down from the 11-month high above $1,000
marked last Friday.
Gold has fallen about 5 percent over the previous four
trading days and is about 9 percent shy of the record-high
$1,030.80 struck last March. Bullion is set to rise 1.3 percent
this month compared with January.
"It's more profit taking after the market rose above $1,000
a week ago," said Adrian Koh, a trader at Philip Futures.
"Investors are getting a bit more cautious about whether
the market will rally back above $1,030 in the near term."
Gold's allure was dented after President Obama made his
first forecast since taking office that the U.S. economy will
shrink 1.2 percent in 2009 before rebounding to 3.2 percent
growth in 2010. []
Obama predicted on Thursday a $1.75 trillion deficit for
the 2009 fiscal year, the biggest U.S. deficit since World War
Two in a budget, underlining the heavy blow the recession has
dealt to the country's finances.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings hit a record 1,029.29
tonnes on Feb. 26, up 0.31 tonne from Feb. 19. []
The spot gold market is likely to see a negative tone in
the near term as investors take a breather, with growth in SPDR
holdings moderating after repeatedly hitting records in the
previous two weeks, Philip Futures' Koh said.
In the longer run, gold would remain supported as investors
are unsure about the effectiveness of measures the U.S. and
other governments are taking to prop up their economies,
traders said.
But they added that funds flowing out to risker assets from
gold, regarded as safe-haven investment, should be limited as
long as there is no clear sign of global demand picking up.
Precious metals prices at 0300 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 939.90 -4.80 -0.51 6.79
Spot Silver 13.02 -0.08 -0.61 15.02
Spot Platinum 1043.00 -7.00 -0.67 11.91
Spot Palladium 194.00 0.00 +0.00 5.15
TOCOM Gold 2961.00 -58.00 -1.92 15.08
31542
TOCOM Platinum 3264.00 -47.00 -1.42 23.08
5667
TOCOM Silver 405.00 -20.90 -4.91 26.84
698
TOCOM Palladium 615.00 -17.00 -2.69 11.82
227
Euro/Dollar 1.2720
Dollar/Yen 97.50
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Editing by Ben Tan)
