* Bullion still attractive as other assets under pressure
(Releads, updates prices)
By Risa Maeda
TOKYO, Feb 24 (Reuters) - Gold steadied slightly below $990
an ounce on Tuesday, but kept an eye on stock markets after
Asia shares followed their U.S. counterparts lower.
Traders said more bad economic news could push gold above
$1,000 again given nagging worries about the stability of the
financial sector and longer-term inflation prospects.
Spot gold <XAU=> was trading at $987.80 an ounce at 0720
GMT, down 0.3 percent from New York's notional close on Monday,
after earlier hitting a low of $983.40.
On Friday, it rose as high as $1,005.40, just 2.5 percent
shy of the record $1,030.80 reached last March.
"The lacklustre physical market is making it difficult to
climb the last phase of the peak," said Pradeep Unni, a senior
analyst at Richcomm Global Services.
"But gold has kept aloof from most asset classes. It is
largely the trust in the yellow metal and the burgeoning
uncertainty in the economy that has been driving gold," he
added.
Tatsufumi Okoshi, senior economist at Nomura Securities
Co's financial and economic research centre, shared the bullish
view on gold's mid-term run and said it was the safest asset
class.
"Stocks are hit hard, other commodities are down, and an
expected fall in bond prices keeps new money from flowing into
bonds," he said, referring to a glut of government debt supply
in the United States and other countries.
Gold is becoming more attractive compared with U.S.
Treasuries, often seen as the least risky asset, as the slide
in Treasury yields is facing an impending surge of bond issues.
Underlining the severity of U.S. debt problems, President
Barack Obama pledged on Monday to cut the ballooning budget
deficit in half over the next four years. []
Obama's month-old administration has pushed through a $787
billion economic stimulus package to try to jolt the world's
biggest economy out of recession.
In addition, the U.S. government looks set to take a bigger
stake in Citigroup <C.N> and inject yet more cash into insurer
AIG <AIG.N>, sources said. []
On Monday, Wall Street fell to a 12-year low as investors
worried that the U.S. government may not be able to stabilise
the financial system. [], sending Asian shares
<.MIASJ0000PUS> down 2.8 percent towards a five-year low.
Among other commodities, oil <CLc1> fell to $38 per barrel
on growing economic worries. []
The SPDR Gold Trust <GLD>, the world's largest gold-backed
exchange-traded fund, said its holdings remained at a record
high of 1,028.98 tonnes at Feb. 23, a level it first marked on
Feb. 19.
Precious metals prices at 0704 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 990.25 -0.70 -0.07 18.92
Spot Silver 14.47 0.06 +0.42 -2.03
Spot Platinum 1084.50 13.50 +1.26 -28.65
Spot Palladium 200.00 4.50 +2.30 -45.65
TOCOM Gold 3040.00 75.00 +2.53 -0.65
77753
TOCOM Platinum 3323.00 99.00 +3.07 -37.76
10484
TOCOM Silver 439.00 15.40 +3.64 -18.85
894
TOCOM Palladium 628.00 -24.00 -3.68 -53.52
1247
Euro/Dollar 1.2716
Dollar/Yen 95.10
TOCOM prices in yen per gram, except TOCOM silver which is in
yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Editing by Michael
Urquhart)
