*Gold supported as stock markets pare recent advances
*SPDR Gold Trust <GLD> holdings hit record 1,038.17 tonnes
By Risa Maeda
TOKYO, March 12 (Reuters) - Gold prices rose and stayed
above $900 an ounce on Thursday, supported by a fall in regional
equities and data showing a resumption of money inflows to
gold-backed securities after a global stock market rally fizzled.
The world's largest gold-backed exchange-traded fund said its
holdings hit a fresh record, signalling that a fall earlier this
month had likely been a blip and investor demand remained strong.
Gold fell as low as $890.30 earlier this week, when a sharp
rebound in stock markets reduced its appeal as a safe-haven
asset. On Thursday, Asian share markets <.MIASJ0000PUS> mostly
fell as a burst of optimism on the U.S. banking sector proved
short-lived.
"The recent turbulence in financial markets confirmed that we
can't expect a sustained stock market recovery, and that's a plus
for gold," said Tatsufumi Okoshi, a senior economist at Nomura
Securities Co's financial and economic research centre.
"But the time is not ripe yet to go really long in gold,
either, as the likelihood of deflation hangs over us and the
dollar has maintained its strength," he said.
Spot gold <XAU=> stood at $912.40 an ounce at 0542 GMT, up
0.6 percent from New York's notional close. It earlier rose as
high as $914.05.
Traders called gold's recovery a minor one, however, led by
investors and traders who had sold it recently.
After hitting an almost 1-year high above $1,000 last month,
gold has shed about 10 percent in the past three weeks.
"The range-bound trade is the market's sentiment right now,"
said Louis Lok, a senior dealer at Bank of China in Hong Kong,
referring to the recent range of between $890 and $920 per ounce.
"In the middle term, gold is still a very good safe-haven
asset especially because we don't have very good outlook of the
U.S. economic performance in the future," he said. "The market is
waiting for the next step of the equities markets."
BULLS ON GOLD
Pointing to upside potential, Royal Bank of Scotland analysts
said in a recent report that gold is far below record highs in
real terms.
At January 1971 values, when the dollar's link to gold was
severed, a record fix on March 17, 2008, of $1,023.50 per ounce
equates to $192 and the January 1980 peak to $334.
"So in real terms last year's 'record' was just 58 percent of
the 1980 high. To beat that 1980 record, gold today would have
been trading in excess of $1,775," the report said.
Another bull, British fund house Schroders <SDR.L>, said this
week that gold may reach $2,000 an ounce in the next year if the
dollar falls. [].
SPDR Gold Trust <GLD> said holdings hit a record 1,038.17
tonnes by March 11, up 9.18 tonnes or nearly 0.9 percent from the
previous day. []
The holdings had logged a fall of 0.3 tonne this month from
the previous record of 1,029.29 tonnes first marked on Feb. 26.
The global economic crisis continues to support demand for
bullion, as investors flee other asset classes such as stocks and
also because major governments' measures to address it tend to
increase inflationary pressure.
World Bank President Robert Zoellick said on Thursday the
global economy may shrink 1-2 percent this year.
He also told Britain's Daily Mail newspaper that G20 leaders,
due to meet in London on April 2, should focus on sorting out
problems in the banking system rather than additional fiscal
measures to boost demand. []
Japan, the world's second-biggest economy, posted its
sharpest contraction in gross domestic product since the oil
crisis of 1974 in the final three months of last year.
Data released on Thursday showed Japan's economy shrank 3.2
percent in October-December, revised from an initial contraction
of 3.3 percent, and economists saw little sign of an early
rebound. []
A Reuters poll showed on Wednesday that the "Great Recession"
will clamp leading global economies in a vicious grip well into
2010 and push unemployment to multi-year records. []
Precious metal prices at 0551 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 912.20 5.55 +0.61 43.50
Spot Silver 12.87 0.12 +0.94 0.16
Spot Platinum 1042.00 -8.00 -0.76 -7.95
Spot Palladium 197.00 2.00 +1.03 -40.66
TOCOM Gold 2835.00 -34.00 -1.19 15.95 37079
TOCOM Platinum 3219.00 -114.00 -3.42 -24.33 9143
TOCOM Silver 394.10 -5.80 -1.45 -20.11 172
TOCOM Palladium 620.00 -11.00 -1.74 -50.60 107
Euro/Dollar 1.2841
Dollar/Yen 96.32
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Chikako Mogi; Editing by Michael
Watson)
