* Gold hits seven-week high as equities drop
* For a technical view on gold, click []
* Coming Up: U.S. NAHB housing market index Aug; 1400 GMT
(Adds comment, updates prices)
By Rebekah Curtis
LONDON, Aug 16 (Reuters) - Gold rose to its strongest in
seven weeks on Monday, boosted by its safe haven appeal as
gloomy Japanese economic data stoked investors' concerns about
the health of the global economic recovery.
Spot gold <XAU=> rose to $1,222 an ounce by 1155 GMT from
$1,214.50 late in New York on Friday, having hit an intraday day
high of $1,224.25 -- its highest since July 1. Bullion struck a
record at around $1,264 in June.
"We still see support for gold," said Walter de Wet, an
analyst at Standard Bank, but he added that the support was not
as robust as it had been below $1,200, a few weeks ago.
"So support there is slowing but still positive."
Japan's economy expanded just 0.1 percent in the quarter to
June, far less than analysts had expected and which diminished
investor appetite for taking risks. Asian and European equities
fell after the data, while on Friday U.S. stocks closed out
their worst week in six. [] []
"There are jitters about the global economic recovery, but
also the fact that we're trading comfortably above $1,200 is
prompting some interest in the gold market," said Eugen
Weinberg, an analyst at Commerzbank.
"Also I would not be surprised to see more physical buying
in front of the festive season in India."
Holdings were unchanged in the world's largest
bullion-backed ETF, SPDR Gold Trust, suggesting that some
investors were happy to hold on to bullion after recent U.S.
economic data pointed to weakness in the economy. []
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U.S. gold futures for December delivery <GCZ0> rose $7.7 to
$1,224.3 an ounce, extending gains from Friday when weak U.S.
economic data boosted the metal's safe have appeal.
CURRENCY CORRELATIONS
Gold resumed an inverse correlation with movements in the
dollar, which fell against the euro and other major currencies.
Recently the metal and U.S. currency had moved in the same
direction due to both being perceived as safe haven assets.
[]
"Gold's ... positive correlation with the euro resumed,
suggesting that the metal's place as the ultimate hedge against
risk remains secure," ABN AMRO said in a note.
"Especially since the outlook for the U.S. dollar remains
weak as far as the eye can see, with U.S. interest rates
likely to remain pinned to the floor well into 2011."
Oil prices rose above $75. Higher oil prices are seen as
triggering inflationary pressures, which are supportive for gold
because the metal is seen as a hedge against inflation. []
Silver <XAG=> traded at $18.19 an ounce from $18.08 an
ounce, platinum <XPT=> at $1,528.65 an ounce from $1,520 an
ounce and palladium at $476.6 an ounce from $472 an ounce.
(Additional reporting by Lewa Pardomuan; Editing by Alison
Birrane and Jane Baird)
