* Central banks across the globe cut interest rates
* Gold keeps gains after brief fall
* Investor rush to safer assets boosts gold's appeal
(Updates prices)
By Humeyra Pamuk
LONDON, Oct 8 (Reuters) - Gold held onto its gains on
Wednesday as investors sought safer assets despite a coordinated
rate cut by the world's biggest central banks to calm battered
financial and equities markets.
The U.S. Federal Reserve led a global round of emergency
interest rate cuts in an effort to contain the worst financial
crisis since the 1930s. []
Gold moved in volatile trade and hovered around $900 an
ounce after falling below that level immediately after the rate
cut announcements, while stock markets trimmed some losses.
Gold <XAU=> was trading at $900.40 an ounce by 1156 GMT, up
$13.8 from 886.60 an ounce late in New York on Tuesday, after
jumping to $915.30 an ounce earlier, its highest level since
September 29.
"Gold will still continue to gain safe-haven interest," said
Simon Weeks, director of precious metals at Bank of Nova Scotia.
"I do not think the cuts will solve the situation. It will
help smooth the situation, but I don't think there are any
miracle cures at the moment," he said.
Gold has risen 25 percent since mid-September as a deepening
financial crisis, spreading to banks in Europe from the United
States, prompted investors to sell investments in equities
markets and seek refuge in safer assets.
Gold is still well below its lifetime high of $1,030.80 an
ounce struck in March of this year.
"It is absolute fear out there right now," said Standard
Bank analyst Walter de Wet. "And it is driving all of the assets
down but safer assets like gold is rising."
Physical demand for gold also has shot up, analysts say, as
the banks being taken over by governments or sold to their
rivals prompted consumers to invest in gold coins.
The U.S. Mint said on Tuesday that because of the extreme
fluctuating market conditions for 2008, as well as current
market conditions, gold and silver demand is "unprecedented".
[]
"There is a lot of tightness in the market," said Jeremy
East, global head of metals trading at Standard Chartered . "It
may well continue -- there is a big demand for physical gold and
for ETFs."
Holdings in the world's largest gold-backed ETF, the SPDR
Gold Trust <GLD>, rose to 745.22 tonnes as of Oct. 8 from 744.54
tonne as of Oct. 7. <XAUEXT-NYS-TT>
Oil prices touched a 10-month low and was down by $3 a
barrel as the continuation of the global financial crisis
heightened the anticipated decline in crude oil demand while the
dollar fell to a fresh 6-month low against the yen.
Platinum <XPT=> was trading at $983.50 an ounce, down from
$1,004.00 an ounce in New York on Tuesday and after falling as
low as $940 an ounce.
The metal has been hit by heavy selling on fears of falling
demand for autocatalysts. It tumbled to $920 an ounce on Monday,
its lowest level since November 2005, on the back of poor car
sales, especially in the United States.
Prices are well below a lifetime high of $2,290 an ounce
struck in March.
New York gold futures <GCZ8> jumped more than 4 percent to
$920 an ounce.
Spot silver <XAG=> was at $11.88/11.95 an ounce after
jumping nearly 5 percent versus $11.51, while spot palladium
<XPD=> was at $197/205 versus $194.00 late in New York on
Tuesday.
(Editing by Christopher Johnson)
