* Strong buying interest offsets big Middle East selling
* No fresh inflows to SPDR Gold holdings <XAUEXT-NYS-TT>
By Chikako Mogi
TOKYO, Aug 18 (Reuters) - Spot gold prices rose closer to
$940 an ounce on Tuesday as investor risk aversion moderated,
after doubts about an economic recovery triggered sharp selling
of cross-market assets the day before.
The euro held steady after falling against the dollar on
Monday, while Asian stocks were up slightly and commodities
broadly turned positive after sinking the previous day when
growth concerns led investors to trim risk exposure and buy
dollars.
Spot gold prices, which hit a two-month high above $970 in
early August, fell to a 2-1/2-week low of $929.70 on Monday.
Traders said the price drop drew a wide range of buyers,
helping to offset large-lot selling and push up the market.
"There was quite a large volume of selling, from the Middle
East, but the market comfortably absorbed it," said Yuichi
Ikemizu, Tokyo branch manager at Standard Bank Plc, noting that
wide-ranging buying interest helped support the market.
Spot gold <XAU=> rose 0.6 percent to $938.60 an ounce as of
0237 GMT, compared with New York's notional close of $932.80 per
ounce.
U.S. gold futures for December delivery <GCZ9> rose 0.5
percent to $940.40 an ounce, compared with $935.80 on the COMEX
division of the New York Mercantile Exchange.
Asian stocks were up 0.5 percent while Japan's Nikkei average
inched up 0.4 percent. [] []
U.S. stocks suffered their worst loss in seven weeks on
Monday due to doubts about the economy's growth prospects. []
The euro inched up 0.3 percent against the dollar on Tuesday,
after hitting a two-week low against the dollar the previous day.
A firmer dollar typically hurts gold, as it makes dollar-priced
bullion more expensive for non-dollar holders and dampens
interest in the precious metal as an alternative asset. []
Traders have said the rally in stocks and broad commodities
on expectations for global economic recovery had run ahead of
reality and a correction was due.
"Looking at how stocks are right now, there isn't a sense the
markets are bracing for a sharp downturn," Ikemizu said.
But if stock declines accelerate on growing doubts about
recovery prospects, industrial metals such as platinum, silver
and copper may face selling pressure and benefit gold, he said.
Physical demand was also expected to keep support firm for
spot gold above $900, he said.
Investor interest in gold, however, remained slack, with
holdings at the world's largest gold-backed exchange-traded fund,
the SPDR Gold Trust <GLD>, staying at 1,065.49 tonnes as of Aug.
17, unchanged from the previous business day. []
Spot silver <XAG=> inched up 0.6 percent to $14.04 an ounce
after tumbling nearly 6 percent to a two-week low of $13.82 an
ounce on Monday. Silver hit a two-month high of $15.16 on Friday
when a softer dollar and optimism over the economic outlook
lifted precious metals.
PRICES
Precious metals prices at 0241 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 938.40 5.60 +0.60 6.62
Spot Silver 14.04 0.08 +0.57 24.03
Spot Platinum 1236.50 16.50 +1.35 32.67
Spot Palladium 268.00 3.00 +1.13 45.26
TOCOM Gold 2876.00 2.00 +0.07 11.78 31625
TOCOM Platinum 3782.00 -2.00 -0.05 42.61 9843
TOCOM Silver 431.50 -7.60 -1.73 35.14 159
TOCOM Palladium 829.00 -4.00 -0.48 50.73 327
Euro/Dollar 1.4112
Dollar/Yen 94.94
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Chris Gallagher)
