* U.S. stocks open up on govt plan to aid life insurers
* Dollar firmer versus euro on safe-haven flows
(Releads, updates prices)
By Jan Harvey
LONDON, April 8 (Reuters) - Gold slipped on Wednesday,
giving up earlier gains, as U.S. stock markets opened higher and
equities recovered in Europe, denting the precious metal's
appeal as an alternative asset.
Spot gold <XAU=> was quoted at $878.60/880.10 an ounce at
1409 GMT from $880.05 late in New York on Wednesday. Earlier it
touched a high of $889.00 an ounce as equities weakened.
But the metal resumed its slide after Wall Street opened
higher on news the U.S. government would extend aid to life
insurers. []
"Gold has been largely taking cues from stock market moves
across the globe, rather than its true fundamentals," said
Pradeep Unni, senior analyst at Richcomm Global Services.
A recovery in the equity markets suggests some gold
investors are selling the metal to buy back into stocks.
Prices eased 3 percent last week as stock markets moved
higher after the G20 leaders' summit in London. But gold rose in
early trade on Wednesday as world stocks slipped for a third
session. []
On the foreign exchange markets, the dollar firmed against
the higher yielding euro as traders bought the U.S. currency as
as an alternative to riskier assets. []
A stronger dollar typically weighs on gold, but the two
assets' usual relationship has broken down in recent months as
both respond to risk aversion.
Analysts say falling prices have also curbed the amount of
scrap gold returning to the market in the last few days. A flood
of scrap supply early in 2009 was a key factor pressuring gold
down from its high above $1,000 an ounce.
According to metals consultancy GFMS, which released its
2009 Gold Report on Tuesday, scrap supply outweighed jewellery
offtake in the first quarter of this year.
EBBED
Gold buying in the world's biggest jewellery market, India,
has eased after firming last week as prices slipped, while
European demand is also ebbing after a brief recovery.
"What we saw earlier in the week as far as physical demand
was concerned below the $880 level is a little bit quieter this
morning," said MKS Finance' head of trading Afshin Nabavi.
"There is not as much enthusiasm."
"But by the same token, there is not really any major
selling as such," he added.
Investment demand has remained firm, with holdings of the
world's largest gold-backed exchange-traded fund, the SPDR Gold
Trust <GLD>, remaining near record levels on Tuesday.
"Gold's price trajectory firmly rests in the hands of
investors," said Barclays Capital in a note.
"A weaker dollar and a potential build in inflation are
likely to spur investors to increase their exposure to gold and
allow prices to gain upward traction once again."
Among other precious metals, spot platinum <XPT=> was at
$1,175.50/1,185.50 an ounce from $1,162. The metal recovered in
the first quarter after tumbling by two-thirds last year from
the all-time of $2,290 an ounce it reached in March last year.
Investors see the metal as good value now prices have
dropped, analysts say, while there are hopes that car demand may
recover if the economic downturn bottoms out. The metal is
chiefly used as a component in catalytic converters.
Spot silver <XAG=> was at $12.22/12.28 an ounce from $12.22,
while spot palladium <XPD=> was at $227.50/232.50 an ounce from
$222.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
