* Eyes on stocks, ETF for gold market performance
* Report on Citigroup helps stocks, hurts dollar, gold
* Safe-haven appeal still firmly in place
By Chikako Mogi
TOKYO, Feb 23 (Reuters) - Gold fell back below $1,000 on
Monday, but market players said it was just a matter of time
before the metal hits a fresh record as global risk aversion
stokes demand for the safe-haven asset.
As financial markets melt down -- the Dow Jones industrials
and European shares slid to six-year lows last week -- the
appetite for gold has helped it rise 12 percent this year
despite weakening industrial and luxury demand.
"The key is for prices to stay above $1,000 and move closer
to $1,030.80, and if this happens early in the week, the market
could see a new peak by the end of this week," said Shuji
Sugata, manager at Mitsubishi Corp Futures and Securities'
research team.
"The $1,000 milestone is so big that there is caution, but
conditions favour gold as risk aversion remains unchanged," he
said.
Spot gold <XAU=> was trading at $988.00 an ounce at 0610
GMT, down 0.8 percent from New York's notional close on Friday
as stock markets rallied on a report that the U.S. government
could take as much as a 40 percent stake in Citigroup Inc.
[]
On Friday it hit $1,005.40, just 2.5 percent below the
all-time high of $1,030.80 an ounce set in March last year.
Volumes of commodity exchange-traded funds and the
performance of the equities market were key to gauging how far
gold prices could rise and how fast, said Yuichi Ikemizu, Tokyo
branch manager at Standard Bank Plc.
"If stocks continue to fall, gold will keep rising," he
said.
Underlining the move from other assets into the precious
metal, a ratio of gold against the S&P 500 index rose to its
highest level since September 1990, and the gold/oil ratio was
at its loftiest since December 1998, according to Reuters data.
"I don't know how high and fast gold prices will rise. It
will depend on ETFs, as money which was not flowing into gold
before is flocking into gold via ETFs," Ikemizu said.
Exchange traded funds allow easy access to gold holdings
via a stock exchange-listed fund, and are a key gauge of
investor interest in the metal.
The world's largest gold-backed ETF, SPDR Gold Trust <GLD>,
said holdings were 1,028.98 tonnes as of Feb. 22, level with
the record high of late last week. []
Further evidence of the gold market's strength came from
data showing that speculative players boosted their net long
positions to 165,921 lots on gold futures traded on COMEX at
Feb. 17, up from 163,622 a week earlier. []
The main pressure on gold comes from falling consumer and
industrial demand, which could cause prices to fall back from
their recent highs.
World Gold Council data last week showed that in 2008
jewellery demand fell 11 percent in tonnage terms while
industrial demand also fell 7 percent on reduced spending on
items such as laptops and mobile phones.
For a graphic of consumer demand trends in gold, click on:
https://customers.reuters.com/d/graphics/CN_GOLD0209.gif
Also, export volumes of gold jewellery from Italy, a major
world exporter, are set to fall in the first half of 2009 as
the economic downturn hit consumer demand across the globe.
[]
The most active December Tokyo gold futures contract
<0#JAU:> hit its highest point in almost five months at 2,996
yen per gram on Monday but eased as the yen inched up against
the dollar.
"TOCOM gold futures are unlikely to mark their own
milestones as their moves depend on currency exchange rates and
spot prices," Sugata said, adding buying momentum will likely
wane as prices approach 3,000 yen.
Precious metals prices at 0630 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 986.70 -10.60 -1.06 12.11
Spot Silver 14.31 -0.07 -0.49 26.41
Spot Platinum 1077.00 -3.00 -0.28 15.56
Spot Palladium 213.00 0.50 +0.24 15.45
TOCOM Gold 2961.00 -3.00 -0.10 15.08
51169
TOCOM Platinum 3222.00 -31.00 -0.95 21.49
8577
TOCOM Silver 425.70 3.70 +0.88 33.32
1882
TOCOM Palladium 651.00 -8.00 -1.21 18.36
299
Euro/Dollar 1.2932
Dollar/Yen 92.94
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 Risa Maeda; Editing by Michael
Urquhart)
