* U.S. bank rescue plan disappoints
* SPDR ETF holdings rise to fresh record
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 11 (Reuters) - Gold rose 1 percent in Europe on
Wednesday as disappointment with the bank rescue plan unveiled
in the U.S. prompted investors to seek out assets such as
bullion-backed exchange-traded funds as a haven from risk.
At 1320 GMT it was quoted at $926.60/928.20 an ounce,
against $914.15 late on Tuesday. U.S. gold futures for April
<GCJ9> delivery on the COMEX division of the New York Mercantile
Exchange rose $15.30 to $929.00 an ounce.
CMC Markets strategist Ashraf Laidi said doubts about the
U.S. plan to shore up banks and the economy had led to fears of
an escalation of debt issuance.
"This combination of further debt escalation with a lack of
any economic result is further fortifying gold's ascent," he
said. "It does make sense for us to retest (last week's high) of
$929."
The United States on Tuesday rolled out a revamped bank
rescue plan that may cost more than $2 trillion. []
Stocks slid by the most in two months after the plan was
unveiled, while oil and currency markets reacted with
scepticism. Gold climbed more than 2 percent as investors sought
safety.
It fell briefly overnight in Asia on profit taking, but has
extended those gains to a session high of $921.90 on Wednesday.
Holdings of the world's largest bullion-backed ETF, the SPDR
Gold Trust <GLD>, rose to a record 894.72 tonnes on Feb. 10, up
12.85 tonnes from the previous day.
"There has been a lot of ETF demand," said Simon Weeks,
director of precious metals at the Bank of Nova Scotia.
"That doesn't seem at all price sensitive or sensitive to
where we are in technical terms. (Buyers) just want the
safe-haven opportunity. As long as that carries on, the market
is going to be very well supported," he added.
Strong sales of gold for ETFs, plus coins and bars, are
helping to make up for weak jewellery sales in traditionally key
bullion markets like India, China and the Middle East.
Gold's main external driver, the dollar, weakened a touch
against the euro, giving up some gains made in the previous
session as dealers digested the implications of the U.S. recue
plan. []
A softer dollar typically benefits gold, which is often
bought as a hedge against weakness in the U.S. currency.
Among other assets, equities slipped in Europe, joining a
global stock sell-off as investors feared the U.S. bank rescue
plan would not be enough to prop up the troubled financial
system. []
Oil prices pared gains to hold just below $38 a barrel after
the International Energy Agency said fuel demand would contract
more sharply than previously thought. []
UPBEAT
Africa's top three gold producers were upbeat on the outlook
for bullion at this week's annual African mining conference, and
experts predicted the precious metal could rise above $1,000 an
ounce this year. []
But separately, the world's number 4 gold producer, Gold
Fields <GFIJ.J>, plans to cut as much as 10 percent of its
workforce through vountary layoffs, a union official said.
[]
Meanwhile spot silver <XAG=> rose to $13.39/13.45 an ounce
from $13.10.
Silver has also benefited from ETF inflows. Holdings of the
largest silver-backed ETF, the iShares Silver Trust <SLV>, rose
1 percent to a record 7,606.89 tonnes on Monday.
Among other precious metals, platinum <XPT=> extended
Tuesday's gains to $1,045/1,055 an ounce from $1,032, while
palladium <XPD=> was up at $207/215 an ounce from $210.
Platinum has risen 6 percent since early Tuesday on the back
of hopes there may be light at the end of the tunnel for the
global economy, and as platinum miners reported operational
cutbacks.
"It looks like strong technical buying above $1,000, once
resistance was breached," said VTB Capital analyst Andrey
Kryuchenkov.
(Editing by Guy Dresser)
