* Heavy gold liquidation triggered amid global stock rout
* AIG seeks cash injection, HSBC unveils rights issue
* SPDR gold ETF holdings unchanged, iShares Silver dips
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, March 2 (Reuters) - Gold erased early
gains to end nearly 1 percent lower on Monday as heavy losses
in equity markets triggered profit-taking after the metal
failed to climb much above $1,000 an ounce last week.
Traders said waning demand from bullion ETFs was another
factor in the market losing steam. Investors fleeing from risk
rushed to bullion over the last few weeks, buoying bullion to
$1,005.40 an ounce on Feb. 20.
"Initially, there was a flight to quality. But later on, as
people started getting liquidated out of the stock market, they
are doing the same in the (gold) exchange-traded funds," said
Mihir Dange, a COMEX gold floor trader.
Spot gold <XAU=> was at $933.05 an ounce at 2:50 p.m. EST
(1950 GMT) after rising around 2 percent earlier to a high of
$958.00. It was down 0.7 percent from its last quote of $939.90
late on Friday
U.S. gold futures for April delivery <GCJ9> settled down
$2.50 at $940.00 an ounce on the COMEX division of the New York
Mercantile Exchange.
"All the equity indices are down, all the equity futures
are down," said Michael Widmer, an analyst at BNP Paribas.
"Given the size of some of the declines we are seeing, there
has been some profit-taking on gold."
World stocks slid to a near six-year low on Monday. The
MSCI world equity index <.MIWD00000PUS> fell nearly 5 percent
and U.S. stocks tumbled 4 percent after insurance giant AIG
reported a huge quarterly loss and said it needed more capital
from the government.
Dange said April gold futures were trading near crucial
support at $937 an ounce. A complete reversal chart pattern
could be triggered if April settled below $937, but bullion's
outlook would remain bullish if it could hold above critical
support, Dange said.
DISAPPOINTING ETF INFLOW
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD>, said it saw no fresh inflows on
Friday, though its holdings are at record levels.
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Buying by bullion ETFs, which issue securities backed by
physical gold, has formed a major tranche of demand since the
beginning of the year. However, inflows waned last week.
"If ETF inflows remain absent from the market, we suspect
that gold can test lower levels in the days to come," said UBS
strategist John Reade in a note.
"But it is worth noting that our U.S. ETF desk reported the
strongest buying interest for weeks on Friday, all from retail
buyers," he added.
He said that if this became a stronger trend in the market
it could mark the end of the correction in gold.
Analysts say they are watching a raft of key data due out
this week for clues as to the next direction of the markets.
U.S. nonfarm payrolls data for February will be released on
Friday.
Spot silver <XAG=> was at $12.91 an ounce, down 1.1 percent
from its Friday finish of $13.05.
Buying by silver ETFs has also been key to keeping prices
high. However, the world's largest such fund, the iShares
Silver Trust <SLV>, reported its first outflow since Jan. 5 on
Friday, though its holdings remain at high levels.
Platinum <XPT=> was at $1,062 an ounce, down 0.8 percent
from its previous close of $1,071, while palladium <XPD=> was
at $192.50, down 0.5 percent from its late Friday New York
quote of $193.50 an ounce.
(Additional reporting by Humeyra Pamuk; Editing by Jim
Marshall)
