* Gold, silver tumble to six-week lows
* U.S. CPI climbs 0.4 percent in February
* Paulson & Co buys $1.3 billion stake in AngloGold Ashanti
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By Jan Harvey
LONDON, March 18 (Reuters) - Gold extended losses to fall
more than 3 percent on Wednesday as investors' appetite for risk
sharpened after positive U.S. economic data.
Spot gold <XAU=> tumbled to a six-week low of $882.90 an
ounce and was at $889.10/890.70 an ounce at 1547 GMT from
$914.20 late in New York on Tuesday, while silver slid 5 percent
to a six-week low of $12.07 an ounce.
U.S. gold futures for April delivery <GCJ9> on the COMEX
division of the New York Mercantile Exchange fell $27.40 to
$889.40 an ounce.
"The safe haven appeal (of gold) is diminishing," said
Heraeus precious metals trader Alexander Zumpfe.
"Equities have been quite strong in the last couple of days,
so there has been some money going out of the safe havens,
mainly gold and silver, and going back into equities."
The euro is one of the assets to benefit from the selling.
"It seems as though today's move is out of gold and the U.S.
dollar to the euro," said Citigroup analyst David Thurtell.
The dollar slipped as better than expected U.S. data helped
appetite for risk. []
Inflation data from the United States precipitated gold's
move lower. The 0.4 percent rise in the February U.S. consumer
price index was "not high", analysts said. []
HSBC analyst Jim Steel told Reuters the data, "combined
with the recovery of risk appetite... would be negative for
bullion."
Traders are awaiting the conclusion of the U.S. Federal
Reserve's two-day policy meeting later in the session.
The Fed has also been contemplating purchases of long-dated
government debt to keep interest rates low by expanding money
supply. []
The Bank of Japan stepped up its outright purchases of
Japanese government bonds earlier on Wednesday, a move MF Global
analyst Tom Pawlicki said in a note could put pressure on gold.
"The yen correlates strongly with gold, and further yen
weakness could imply reduced need for safe-haven," he said.
Investors often borrow yen to invest in other higher
yielding, riskier assets.
Prices are also being pressured by the growing tide of scrap
metal returning to the market, as consumers are tempted to sell
old jewellery by high prices and pushed to raise cash by the
faltering economy. []
PAULSON BUYS STAKE IN MINER
U.S. hedge fund Paulson & Co showed its confidence in the
gold sector with the purchase of a $1.3 billion stake in the
world's third largest gold miner, AngloGold Ashanti <AGLJ.J>,
from mining group Anglo American <AAL.L>. []
AngloGold, which focuses on South Africa, produced 4.982
million ounces of gold last year.
"The very fact that Paulson has made this move is going to
prompt other hedge funds to look at why, and what the merits of
following that with similar purchases are," said Fairfax analyst
John Meyer.
"AngloGold is deep-level, higher-cost, quite highly
leveraged gold mining, with good liquidity and good scale," he
said. "(Paulson) clearly feel that gold is going to strengthen."
Among other precious metals, spot silver <XAG=> was at
$12.17/12.24 an ounce from $12.70, tracking gold.
Spot platinum <XPT=> slid to $1,035.50/1,045.50 an ounce
from $1,043.50, while spot palladium <XPD=> was at
$191.50/195.50 an ounce from $191.50.
Zurich Cantonal Bank (ZKB) said on Wednesday its platinum
ETF <ZPLA.S> holdings have risen 22 percent since early February
to 160,800 ounces. []
Investors have bought heavily into precious metals-backed
ETFs in recent months as they seek a haven from volatility in
other asset classes.
(Reporting by Jan Harvey; Editing by Anthony Barker)
