* Equity markets rise on hopes downturn may bottom out
* SPDR gold ETF hits new record
(Updates throughout, previous TOKYO)
By Jan Harvey
LONDON, March 16 (Reuters) - Gold eased in Europe on Monday
as improved appetite for risk sparked an uptick in the equity
markets and dented interest in the metal as a safe haven.
However, firm investment demand in the precious metal
demonstrated by a fresh rise in exchange-traded fund holdings
last week was supporting prices, analysts said.
Spot gold <XAU=> declined to $922.80/924.30 an ounce from
$927.90 late in New York on Friday.
"Gold has been kind of caught mid-way between rising stock
markets and investment fund flow through the ETF channel," said
Pradeep Unni, senior analyst at Richcomm Global Services.
"Technically it looks like gold has been waiting for
stronger clues from the stock markets," he added.
World stocks climbed again on Monday for the fifth session
in a row as hopes the U.S. economic downturn may be bottoming
out lifted appetite for equities. []
Federal Reserve Chairman Ben Bernanke said on Sunday the
United States should start recovering from recession next year
if there was political will to finish the costly rescue of its
shattered banking system. []
A slight pick-up in risk appetite rippled throughout the
markets after the news, with assets such as gold and the dollar,
which benefit from risk aversion, dipping as stocks ticked up.
Traders in the U.S. currency are looking ahead to Federal
Reserve and Bank of Japan policy meetings this week after a
meeting of the Group of 20 finance ministers this weekend gave
currency investors few trading incentives. []
The uncertain economic outlook and concerns over financial
sector stability have driven strong buying of gold and products
such as bullion-backed ETFs since the beginning of the year.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings hit a record 1,056.82
tonnes as of March 15, up 15.29 tonnes or 1.5 percent from the
previous day. []
TRUST
The trust took over from the Swiss National Bank as the
sixth largest gold holder last week. Further buying in ETFs is
likely to support gold, analysts said.
"It's likely that additional ETF buying will be seen this
week," said MF Global analyst Tom Pawlicki. "Such buying will
raise the notion again that investment is enough to make up for
the fall-off in jewellery demand."
Gold's underlying supply and demand fundamentals are lending
little support to prices, analysts said. Dick Poon, manager of
precious metals at Heraeus in Hong Kong, said physical demand
was weak, especially from the jewellery sector. []
Meanwhile sales of scrap gold are persisting in India, the
world's biggest gold market, as prices recover from a one-month
low.
Among other precious metals, spot silver <XAG=> tracked gold
down to $13.01/13.08 an ounce from $13.17.
Spot platinum <XPT=> was little changed at $1,055/1,065 an
ounce from $1,054.50, while spot palladium <XPD=> was steady at
$197/200 an ounce from $196.50.
Both metals, which are primarily industrial in nature, are
suffering from weakness in economic activity. A slowdown in car
sales has knocked them both down by more than 50 percent in the
last year.
(Editing by James Jukwey)
