* Equities slip for second day running on flu fears
* ECB says plans to renew Central Bank Gold Agreement
(Adds comment, updates prices)
By Jan Harvey
LONDON, April 28 (Reuters) - Gold slipped 2.5 percent in
Europe on Tuesday on technical selling, with traders
disappointed over the metal's failure to sustain its rally to a
near four-week high in the previous session.
Losses in gold pressured other precious metals, with
platinum and palladium both down more than 5 percent at their
session lows and silver off more than 4 percent.
Spot gold <XAU=> was bid at $887.65 an ounce at 1318 GMT,
against $906.75 an ounce late in New York on Monday. Earlier it
touched a low of $883.70.
The precious metal made good gains on Monday as equity
markets slipped, due partly to fears a swine flu outbreak could
hurt the economy, and on hopes China would continue to buy gold.
For a factbox on swine flu, please click on []
But its failure to sustain those gains through technical
resistance at $918.50 an ounce, identified by analysts who study
charts of past price movements, sparked selling.
Gerry Schubert, director of precious metals at Fortis Bank,
said gold's sharp move lower overnight had set a downward trend
in the market, and that the opening of New York trading had seen
a spate of technical selling and weak long liquidation.
"In the last two days, we are down $30, and that is too much
for you not to have to react if you are a technical trader and
long," he said.
The boost provided by news that China has hiked its gold
reserves by three-quarters since 2003 has largely petered out,
traders said. Nout Wellink, a member of the governing council of
the European Central Bank, said China's move to diversify
reserves was positive, but unsurprising. []
He also said the bank planned to renew the Central Bank Gold
Agreement, which restricts signatories' gold sales to 500 tonnes
a year, when it expires in September.
Gold and gold receivables held by euro zone central banks
fell sharply in the week to April 24, down 823 million euros,
the ECB said separately. []
Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, were unchanged on Monday and
are down nearly 23 tonnes month-on-month. []
"(There is) still no interest on the physical front," said
Afshin Nabavi, head of trading at MKS Finance in Geneva.
Demand for the metal in India has picked up a touch ahead of
the wedding season but is still lower year-on-year. Traders said
gold demand for the Akshaya Tritya festival on Monday was down
20-40 percent on the year. []
PANDEMIC
On the wider markets, equities declined sharply once again
in Europe after a weak session in Asia, as concerns over the
potential for a flu pandemic to hurt the economy spread, while
the dollar was steady against the euro. [] []
Oil slipped below $49 a barrel, extending Monday's losses,
as stock markets losses and the spectre of a global flu pandemic
raised fears over a new fall in demand. []
Gold typically tracks oil prices, which are a key driver of
inflation, against which the metal is often bought as a hedge.
Traders are awaiting fresh direction from the outcome of a
two-day meeting of the U.S. Federal Open Market Committee.
"The FOMC meeting will be closely monitored on Wednesday and
any more statements on quantitative easing would help to limit
losses in the precious metal," VTB Capital said in a note.
Among other precious metals, spot platinum <XPT=> fell more
than 6 percent to a low of $1,066.50, and was later at $1,082.50
an ounce against $1,139.
Palladium <XPD=>, meanwhile, touched a low of $210.50, down
5.6 percent, and was later bid at $212 an ounce against $223.
The metals, mainly used in autocatalyst manufacturing, have
suffered from a decline in the car industry over the last year.
More bad news for carmakers emerged on Monday as General
Motors <GM.N> offered its final reorganisation plan by slashing
bond debt, cutting over 21,000 more U.S. jobs and emerging as a
nationalised carmaker under the control of the U.S. government.
Platinum is also being pressured by weakness in other
precious metals. "With gold on a negative footing, platinum is
finding itself in very difficult waters," one analyst said.
Silver <XAG=> was bid at $12.38 an ounce against $12.89.
(Editing by Sue Thomas)
