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)

Gold slipped from a three-month high on Friday after data showed the U.S. economy had contracted by less than expected in the fourth quarter, taking some of the heat out of safe-haven buying.

Spot gold climbed 2 percent to $926.90 an ounce, its highest since Oct 10. It was quoted at $918.90/920.90 an ounce at 1406 GMT, up from $906.75 in New York late on Thursday. In the immediate wake of the data it slipped to $916.60.

Gold priced in euros hit a record high of 720.53 euros.

“On first glance the (GDP) figures are generally good, so they should be negative for gold,” Calyon analyst Robin Bhar said. “Growth is better than expected, but deflation is also stronger, so it is a bit of a double whammy for gold.”

The U.S. Commerce Department said fourth-quarter gross domestic product fell at a 3.8 percent annual rate, the lowest pace since the first quarter of 1982.

Analysts had forecast GDP contracting 5.4 percent in the fourth quarter.

Gold is still being supported, however, by interest in the precious metal as a haven from risk.

U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange were up $15.80 at $920.80 an ounce.

Market talk of China taking an interest in gold as an alternative to U.S. Treasuries, and of a European fund buying bullion, also helped support prices.

Gold has risen around 3 percent this week as investors have scrambled for the safety of gold and bullion-backed assets such as exchange-traded funds.

“The ETFs were up another 15 tonnes yesterday,” Simon Weeks, director of precious metals at the Bank of Nova Scotia, said, adding safe haven demand was driving the market.

The world’s biggest gold-backed ETF, New York’s SPDR Gold Trust , said its holdings jumped more than 10 tonnes on Thursday to a record 843.59 tonnes.

SPDR’s holdings have risen more than 63 tonnes or 8 percent since Dec 31.

European equity markets and U.S. stock index futures turned higher after the U.S. GDP data, showing a better appetite for assets such as stocks and shares.

The dollar also pared gains against the euro. A new wave of risk aversion hit the currency markets earlier on Friday, with the yen and dollar edging higher as investors worried about risk.

Although gold usually moves in the opposite direction to the dollar, the negative correlation between the two has broken down in recent weeks as both assets gained on risk aversion.

INDIAN GOLD HITS RECORD

Jewelerydemand remains hamstrung by high prices. In India, the world’s biggest bullion market, gold futures touched an all-time high of 14,448 rupees per 10 grams, deterring buyers.

Scrap sales are booming, however, as consumers cash in on the price rise.

Russia’s gold output rose by 13.3 percent to 184.49 tonnes last year, chiefly on the back of improving mine output, the Russian Gold Industrialists Union said.

Silver prices tracked gold, rising to a peak of $12.57 an ounce, their highest since Oct 1. It was later quoted at $12.44/12.50 an ounce against $12.31.

Silver ETFs have also risen sharply this year, with the largest, the iShares Silver Trust , up 660 tonnes or 10 percent in the year to date.

Among other precious metals, platinum and palladium were little changed. Platinum was at $980/985 an ounce against $972.50, while palladium was at $193/198 an ounce, against $191.50.

The world’s biggest palladium producer, Russia’s Norilsk Nickel , said its palladium output was 2.821 million ounces in 2008. It previously reported 2007 output at 3.113 million ounces.

A Reuters survey of 56 precious metals analysts and traders showed most expected the platinum group metals to post significant losses this year as the global economic slowdown pressures demand.

LONDON, Jan 30 (Reuters)

The market is awaiting fresh direction from the crude oil market, which rose ahead of an expected production cut from the Organization of the Petroleum Exporting Countries (OPEC).

Spot gold was quoted at $855.60/857.60 an ounce at 1024 GMT, little changed from $857.35 an ounce late in New York on Tuesday. U.S. gold futures for February delivery were up $14.70 at $857.40.

Gold is likely to consolidate after recent sharp moves, analysts said.

“We have jumped so much in a relatively short period of time without any major changes on the fundamental side,” said Wolfgang Wrzesniok-Rossbach, the head of sales at Heraeus.

While gold was benefiting from dollar weakness and safe-haven buying as a result of the financial crisis, physical demand for bullion was tailing off as prices rose, Wrzesniok-Rossbach said.

“Fundamentally the situation might not be 100 percent positive, but everything related to the financial crisis is positive for gold.”

Gold climbed in late New York trade on Tuesday after the Fed said it was cutting rates to between zero and 0.25 percent, knocking the dollar lower and prompting further rate cuts from Hong Kong and Kuwait.

The dollar hit a 2-1/2 month low against the euro on Wednesday after the cut.

However, “technical momentum signals are warning of an upside correction for the greenback today,” said Standard Bank analyst Walter de Wet. “This could restrain precious metals.”

The other main external driver of gold, crude oil prices, were broadly supportive, ticking up $1 a barrel ahead of an OPEC decision on production quotas.

The cartel is expected to cut output by some 2 million barrels to shore up the falling oil price, which has dropped around $100 a barrel from the highs it hit earlier this year.

DEMAND MIXED

Physical demand for gold was mixed, with traders reporting falling interest in gold coins and bars in Europe and Indian buyers said to be staying away until prices fall.

However, investment demand for gold-backed exchange-traded funds was firm. The world’s largest bullion-backed ETF, the SPDR Gold Trust , said its gold holdings rose 3.98 tonnes on Dec. 16 and are up 1 percent or 7 tonnes since Friday.

Among other precious metals, platinum and palladium were little changed. The two metals, which are primarily used to make catalytic converters, have fallen sharply in recent months on fears demand would suffer from a slowdown in car sales.

Platinum is now trading close to parity with gold, a situation last seen in 1996. However, the metal is likely to recover next year, analysts said.

“Current price levels for platinum group metals are not sustainable for many South African producers unless there is a sharp weakening of the rand,” said Fairfax analyst Marc Elliott.

“Consequently the eventual recovery of the automotive market appears likely to prompt a shortage that should lift PGM prices perhaps to levels seen earlier this year.”

“However, for the next few months we see little reason for a substantial improvement, unless some major production cuts (or) disruptions take place,” he added.

Spot platinum was quoted at $856/866 an ounce against $860.50 late in New York on Tuesday, while palladium was at $176.50/181.50 an ounce against $178.

Silver fell to $10.98/11.06 an ounce from $11.21.

By Jan Harvey
LONDON, Dec 17 (Reuters)

Platinum was rangebound through most of the New York day, but rallied strongly after the Comex closed, ending at $825/oz., up $44. Overnight, platinum has fallen off.

Silver went on a very wild ride, pushing to near $9.30 in the far East, jumping off a cliff once London opened, falling below $8.50, shooting back above $9.10 at the New York open, then getting slammed back below $8.60, and finally rising again from late morning through the Globex, to close a most tumultuous day at $9.19/oz., up 14 cents. Overnight, silver is trending higher. (Click here for charts)

It was a volatile day for the precious metals yesterday, but in the end all ended with at least modest gains. Soaring equities probably served to cap any advances somewhat, and falling oil also worked against them, while a weaker dollar helped out.

Extreme unpredictability remains the order of the day, equally with gold as with the stock market. The bull is not quite ready to stampede as yet.

As James Moore, of TheBullionDesk.com, put it, “with volatility still at record levels and hedge funds still seeing large scale redemptions, the metal remains at risk to a bout of selling.”

Matthew Zeman, a metals trader at LaSalle Futures Group in Chicago, states flatly that, “Any big rallies are going to be sold.”

However, Zeman adds, “If and when the credit markets are functioning normally again, they’re going to start talking about inflation, and gold can spike $100 in a day. But now, the biggest reason gold is suffering is that all this money is staying in cash or flocking to Treasuries.”

Zeman believes that if equities markets turn around, that will be positive for metals, rather than drawing money away from them. “You get a bit more risk appetite when equities are doing better,” he notes. “If sentiment is positive, we will see money come back into commodities.”

Meanwhile, the SPDR Gold Trust, the largest gold ETF backed by bullion, stood at 749.21 tons Monday, up 2.15 tons from Friday. It was the first rise since gold held by the fund hit a record high of 770.64 tons on October 10.

Source: Metals rise with stock market -  Silver has wild up and down day.