* Stocks climb in Europe, open higher in United States
* SPDR gold ETF holdings unchanged
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, March 10 (Reuters) - Gold fell more than 2 percent
on Tuesday to below $900 an ounce as equity markets rose,
denting interest in the metal as a safe store of value.
Spot gold <XAU=> fell to $898.60/900.60 an ounce at 1426 GMT
from $920.95 late in New York on Monday. U.S. gold futures for
April delivery <GCJ9> on the COMEX division of the New York
Mercantile Exchange fell $17.80 to $900.20 an ounce.
"Gold has been unable to hold on to any intermittent gains
and most rallies have been used as fresh selling opportunities,"
Pradeep Unni, senior analyst at Richcomm Global Services, said.
He said support at $900 had prevented an accelerated
sell-off over the last couple of sessions, but breaking this
zone meant gold could fall to around $885.
"The recent volatility in equity markets has been getting
reflected in to the yellow metal quite vividly," he said.
U.S. equities rose sharply on Tuesday as financials led a
broad run-up from 12-year lows after Citigroup <C.N> gave
reassurances about its performance and investors became hopeful
about efforts to stem the economic slide. <.N>
World stocks rose after three consecutive days of declines
knocked them to six-year lows, with the MSCI world equity index
<.MIWD00000PUS> climbing more than 1 percent. []
Among other commodities, oil rose above $47 a barrel as
dealers weighed up OPEC's decision on output this weekend, while
the base metals also climbed. [] []
Standard Bank analyst Walter de Wet said a move higher on
Tuesday in equities, oil and other commodities showed "people
are slightly more optimistic on the real economy".
The dollar fell against a basket of currencies on Tuesday,
retracing the previous day's gains. []
Gold is typically bought as an alternative investment to the
dollar and until recently moved in the opposite direction to it.
However, the link between the two assets has recently weakened,
with both now reacting to risk aversion.
BLEAK
Analysts say the bleak global economic outlook and currency
market volatility will support gold prices. Plunging equity
markets and inflation fears pushed the metal to an 11-month high
above $1,000 an ounce last month.
Swiss bank UBS -- using an econometric model based on
volatility in inflation levels, a dollar index and inflation as
measured by U.S. CPI -- said it sees an upside limit for gold of
$2,500 an ounce and a floor of $500. []
But slack jewellery buying as prices rise is likely to cap
gains, as will a surge in scrap supply.
"The past week's reports from the physical gold markets of
India and China and last week Turkey also were anything but
positive as far as jewellery demand is concerned," precious
metals trading house Heraeus said in a weekly note.
Gold demand in India was quiet on Tuesday as banks closed
for a public holiday. []
Falling jewellery demand was offset by strong buying for
gold-backed exchange-traded funds earlier in the year. That,
however, has stalled.
The SPDR Gold Trust's holdings have remained relatively
steady in the last two weeks. In comparison, they jumped by some
200 tonnes in the first six weeks of the year. []
Among other precious metals, spot silver <XAG=> slipped to
$12.59/12.66 an ounce from $12.92. Spot platinum <XPT=> fell to
$1,035/1,040 an ounce from $1,058, while spot palladium <XPD=>
was little changed at $194/199 an ounce from $194.
Both platinum group metals have suffered from fears the
recession will curb demand from carmakers, the major buyers of
the metals used in catalytic converters, and jewellers.
(Editing by Sue Thomas)
