Stabilising stock markets and the dollar’s rise over the past week after the U.S. government announced measures to clean toxic assets off banks’ balance sheets put a cap on gold prices, undermining the yellow metal’s appeal as a safe haven.

Still, uncertainties over the sustainability of a stock market rally and the dollar’s rise, as well as the global economic outlook, kept intact investor appetite, resulting in record holdings of gold-backed securities.

“The stock market is stabilising and investors are stopping their safe-haven buying of gold,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. At the same time, there was nothing to justify selling of gold because it was not clear how the economy fares, he said.

Gold was at $921.05 per ounce by 0240 GMT, little changed from New York’s notional close of $922.10. Gold has held firmly above $900 thanks to buying related to gold-backed securities.

At current levels, gold is up about 5 percent on the quarter but 10.6 percent below an all-time high of $1,030.80 hit a year ago. Bullion has recovered about 4 percent from a six-week low of $882.90 hit on March 18, but is 8 percent off the 11-month high above $1,000 set in February.

It has been six months since the collapse of Lehman Brothers, which aggravated the financial crisis, and the global economy and financial system have yet to show a clear sign of a turnaround, traders said.

“Unless the economy really starts working and stock markets rally, and banks start lending and businesses revive, people will not jump out of the gold market,” Leung said.

Trading was subdued due to the month-end and as some players turned cautious ahead of U.S. nonfarm payrolls data due later in the week. There were not many expectations for a meeting later in the week of the G20 group of the world’s 20 biggest economies, traders said.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , said holdings rose 2.45 tonnes to a record 1,127.44 tonnes on March 29.

For details on the gold holdings of the ETF listed in New York and co-listed on other exchanges, click on: http://www.exchangetradedgold.com/iframes/usa.php

Tokyo shares fell 1.8 percent on Monday as investors locked in profits from last week’s sharp rally.

The dollar firmed after the euro posted its biggest one-day fall since early January on Friday.

Later on Monday, data on British consumer credit and mortgage lending for February and euro zone March business climate sentiment will be released.

Prices as of 0250 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 921.65 -0.45 -0.05 4.72 Spot Silver 13.29 0.02 +0.15 17.40 Spot Platinum 1129.00 6.00 +0.53 21.14 Spot Palladium 215.50 -2.00 -0.92 16.80 TOCOM Gold 2926.00 -34.00 -1.15 13.72 13488 TOCOM Platinum 3585.00 -58.00 -1.59 35.18 7031 TOCOM Silver 416.40 -7.00 -1.65 30.41 221 TOCOM Palladium 690.00 -16.00 -2.27 25.45 291 Euro/Dollar 1.3269 Dollar/Yen 97.68

TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.

March 30 (Reuters)

Oil prices dropped more than $1 on Friday as the deteriorating global economic outlook stoked concerns that crude demand will continue to shrink.

U.S. crude futures for March delivery, which expire on Friday, fell $1.13 to $38.35 a barrel by 1228 EDT (1728 GMT), after posting the biggest settlement gain since Dec. 31 in the previous session.

Brent crude fell $1.09 to $40.90 a barrel.

The losses tracked weakness in U.S. stocks, which fell sharply led by banking shares on fears that a U.S. bank rescue plan might lead to nationalization.

Economic news was grim outside the United States as well, with European shares hitting a six-year low as investors fretted about capital increases and bank nationalization on the back of a deepening economic downturn.

The broad Topix index of Japanese shares closed at its lowest level in about 25 years.

A rally in gold, a traditional safe haven for investors, to over $1,000 an ounce, its highest since March of last year, also added pressure to oil prices by drawing investors away from riskier markets, dealers said.

Oil prices had rallied strongly on Thursday, jumping 14 percent after data showing an unexpected draw in U.S. crude stocks. But worries over the health of oil demand have resurfaced, with sentiment dented by sharp falls in equity markets.

“There were some signs (in inventory data released Thursday) that oil may be stabilizing, at least demand. But this morning crude oil is lower and the market is still looking at the weakness of the economy.” said Peter Beutel, president at Cameron Hanover in New Canaan Connecticut.

Crude inventories in the United States, the world’s top consumer, fell slightly last week on lower imports and higher demand, the U.S. Energy Information Administration said, snapping seven straight weeks of builds against market expectations.

Crude prices have fallen more than $100 a barrel from the peaks hit last July as the worsening economic crisis has bitten into oil demand, prompting the Organization of the Petroleum Exporting Countries (OPEC) to agree to deep output cuts.

In the latest indication that OPEC members are complying with the agreed cuts, Kuwait notified at least two buyers in Asia that it will keep curbs of 5 percent below contracted volumes for April-June term crude oil supplies, steady from March, trade sources said.

Source: NEW YORK, Feb 20 (Reuters)

U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange fell $10.30 an ounce to $898.50.

“One of the things that has really helped gold a lot has been the issues in the banking system,” Michael Widmer, an analyst at BNP Paribas, said.

“Looking at the newsflow over the last few days, there was a bit of relief after Barclays’ (BARC) announcement (on its performance),” he said. “That took away some of the immediate buying (of gold).”

On the currency markets, typically a key driver of gold, the euro ceded early gains after hitting a one-week high versus the dollar. However, this failed to pressure gold as it lifted from lows.

Gold typically moves in the opposite direction to the dollar, but its usual relationship with the currency has weakened, with both assets slipping earlier on Tuesday as risk aversion eased.

“A stronger dollar implies panic about the economic outlook but should mean a weaker gold price, in theory,” Daniel Smith, an analyst at Standard Chartered, said.

“The fact that that (relationship) has broken down highlights how worried people are about where they can put their money and who they can trust.”

A Reuters survey of 52 analysts published on Monday showed most expect gold to hold its ground in 2009 despite expected falls in other asset prices, on worries over the global economic outlook and turmoil in the financial markets.

Investment in physically backed products such as exchange-traded funds has been strong in recent weeks as investors seek a safe store of value.

Holdings of New York’s SPDR Gold Trust (GLD) inched up to a new record for the sixth consecutive session on Monday, and have climbed more than 52 tonnes since the beginning of the year.

London-based ETF Securities said its gold-backed ETFs saw inflows of 420,000 ounces last week.

SENSITIVE

However, gold jewelery demand remains weak, dealers say.

“As the demand for jewelery is very sensitive to price movements, demand for gold from India, Turkey and the Middle East, the main centres of the gold jewelery industry, should continue to weaken,” said Commerzbank.

Silver softened in line with gold to $11.98/12.06 an ounce from $12.04 an ounce late on Monday.

The Reuters survey showed most analysts expected silver prices to fare better than those of platinum and palladium, as risk aversion boosts its appeal as a safe haven.

The platinum group metals are also under pressure from gold’s fall. Both platinum and palladium suffered in recent months from fears over falling demand from carmakers, who account for around half of global consumption.

“Demand weakness is likely to weigh on the market in (the first half) and prices are likely to gain traction in line with a pick up in the economic growth towards the end of the year,” Barclays Capital said in a note.

South Africa-focused Aquarius Platinum (AQP) said it expects to report a first-half after-tax loss of $75-$85 million due to weak metals prices. Attributable production of PGMs rose 2.7 percent in December, it added.

Platinum edged down to $944.50/954.50 an ounce from $959.59, while palladium eased to $189/194 an ounce from $190.

LONDON, Jan 27 (Reuters)

The bid was also partially kneecapped by antitrust concerns raised by the European Commission, which mandated BHP unload assets for approval.

And Rio’s net debt of $39 billion was yet another concern for BHP.

“Recent global events and associated falls in commodity prices have… altered risk dimensions. BHP Billiton is very focused on balance sheet strength. Accordingly, the greater debt exposure of the combination plus the difficulty of divesting assets have increased the risks to shareholder value to an unacceptable level,” Marius Kloppers, BHP Billiton’s CEO, said in a statement.

BHP, the world’s largest mining company, announced the hostile bid last November. Its first offer allotted three BHP shares for each share of Rio, valuing the company at about $127 billion.

Rio Tinto Chief Executive Officer Tom Albanese rejected it, calling it “several ballparks away” from Rio’s value. BHP returned in February with a sweetened offer of 3.4 shares for each share of Rio. That offer, worth about $147 billion, was also rejected.

Since then, sinking stock markets and commodities prices have dragged down the companies’ stock value, making the value of BHP’s bid was about $66 billion Tuesday afternoon, Reuters reported.

The dropped bid clipped as much as 40% from Rio’s New York-listed American Depository Receipts (ADR) Tuesday, while BHP’s New York-list ADRs moved up a healthy 13% by the end of trading.

Competitors Cheer

Had Rio accepted BHP’s offer, it would have created a resource group capable of holding sway over a considerable portion of the world’s resources, including supplies of copper, aluminum, coal and iron ore.

BHP-Rio Tinto would control 14% of the world’s thermal coal and 13% of the worldwide copper supply. The company would also supply one-third of the world’s traded iron ore and 38% of the world’s seaborne iron ore trade.

Such a tight grip would have forced competitors to slash prices to compete.

“Steel makers around the world will be rejoicing today,” Ian Rogers, director of industry trade group U.K. Steel, told MarketWatch.

Source: BHP Abandons Hostile Bid for Rio

Hedge funds declined by an average 0.7 percent in June, bringing the year-to-date loss to 0.75 percent, data compiled by Hedge Fund Research Inc. show. It’s the worst start to a year since the Chicago-based firm began tracking returns in 1990. The $1.9 trillion industry has posted one losing year, in 2002, when funds fell 1.45 percent amid the 23 percent decline by the Standard & Poor’s 500 Index.

With hedge funds producing such losses, investors forked over half as much to fund managers in the first quarter ‘08, $16.5 billion, as they did in the last quarter of ‘07, just over $30 billion.

So, the investment vehicle of the rich is also getting pinched in this global downturn. Though funds that invest based on views of the global economic outlook were able to hit double-digit returns this year. This from the Financial Times:

These so-called macro hedge funds, which attempt to identify extreme valuations in stock markets, interest rates, foreign exchange rates and commodities, have shown returns of more than 12 per cent this year, outperforming the S&P 500 index by about 17 per cen.

To identify extreme price valuations, macro hedge fund managers generally employ a global approach that concentrates on forecasting how global macroeconomic and political events affect the valuations of financial instruments.

Worries about the state of the US and world economy show few signs of easing. A recent survey of more than 70 US hedge fund managers and their advisers has found that most have a broadly pessimistic view on the prospects in 2008 for the country’s economy, which 80 per cent expect to be flat or in recession by the end of the year. Many expect the Federal Reserve to raise interest rates rather than lower them further.