* Stocks, commods soar on hopes economic crisis is bottoming
* ECB cuts rates by smaller-than-expected 25 bps
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By Jan Harvey
LONDON, April 2 (Reuters) - Gold fell 2 percent on Thursday
as appetite for other assets such as equities and industrial
commodities rose sharply on hopes the G20 leaders' summit would
result in concerted efforts to stimulate the global economy.
The precious metal lifted from lows, however, as the dollar
weakened further against the euro after the European Central
Bank opted to cut interest rates by a smaller-than-expected 25
basis points. []
Spot gold <XAU=> slid to to a low of $907.75 an ounce but
had recovered to $913.75/914.75 an ounce at 1214 GMT, against
$926.40 late in New York on Wednesday.
U.S. gold futures for April delivery <GCJ9> on the COMEX
division of the New York Mercantile Exchange slipped $12.10 to
$914.00 an ounce.
"As long as the G20 demonstrates a more united front, along
with plans to reform the IMF and voting rights, etc., then other
commodities (and) stocks will rally and gold will come off,"
said Simon Weeks, head of precious metals at the Bank of Nova
Scotia.
World leaders will impose new financial rules and triple the
war chest of the International Monetary Fund to fight the worst
economic crisis since the 1930s, sources at the G20 summit said.
[]
The summit will also discuss the prospect of gold sales by
the International Monetary Fund. The IMF has already said it
intends to sell 403 tonnes of gold, but the decision is awaiting
the approval of the U.S. Congress. []
"The crucial question will be whether markets are satisfied
with what the leaders of the G20 decide on stimulating the
economy," said Peter Fertig, a consultant at Quantitative
Commodity Research in Germany.
"If (investors) get the impression that the worst is over,
that stock markets are going to stabilise further -- as they are
rallying this morning -- that would be a negative factor for
gold," he said.
European stocks surged on Thursday on hopes that the global
economic downturn is bottoming out, while MSCI's all-country
world stock index rose 1.9 percent. []
As more investment flows into the equity markets, less will
be spent on other assets such as gold. A recovery in risk
appetite suggested by an uptick in share prices also knocked the
dollar lower against a basket of major currencies. []
ECB RATE CUT
The euro extended gains against the U.S. currency after the
ECB said it is cutting its refinancing rate by 25 basis points
to 1.25 percent. A weaker dollar typically benefits gold, which
is often bought as an alternative asset to the currency.
ECB head Jean-Claude Trichet will explain the decision at a
news conference at 1230 GMT, where analysts will look for signs
of further cuts.
The markets are also awaiting key U.S. non-farm payrolls
data on Friday for fresh impetus, traders said.
Among other precious metals, platinum was steady, showing
little reaction to a smaller-than-expected 37 percent drop in
U.S. auto sales in March. []
The metal, which is primarily used as a component in
catalytic converters, shed nearly two-thirds of its value last
year after hitting a record high in March, as the global
slowdown battered the car industry.
Spot platinum <XPT=> was at $1,134/1,142 an ounce from
$1,133.50, while spot palladium <XPD=> was at $217/222 an ounce
from $218.
Spot silver <XAG=> eased to $12.92/12.98 an ounce from
$13.01, taking its cue from gold.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
