* Gold firms as equities drop, holds near peak
* Coming Up: U.S. mortgage index Weekly; 1100 GMT
(Updates prices, adds graphic)
By Lewa Pardomuan
SINGAPORE, Sept 8 (Reuters) - Gold gained on Wednesday,
within sight of a 2-month high hit the previous day, as global
stocks tumbled and the euro slipped on renewed fears about the
health of the global economy.
Gold, which is also a few dollars away from a lifetime high
of around $1,264 an ounce struck in June, is on track for its
tenth annual gain -- its longest run of yearly increases in
more than 40 years.
Gold <XAU=> added $3.85 to $1,256.95 by 0356 GMT after
rising as high as $1,259.80 on Tuesday, its strongest since
June 28, with investors rattled by a Wall Street Journal report
that said "stress tests" published more than a month ago
underestimated some lenders' holdings of potentially risky
government debt.
"There's a possibility that we'll see gold breaching the
$1,260 level," said Ong Yi Ling, an investment analyst at
Phillip Futures in Singapore.
"So I think really we are at the level where any economic
news that comes out that is less than favourable will drive
investors to seek out gold as a safe haven."
U.S. gold futures for December delivery <GCZ0> were barely
changed at $1,258.4 an ounce, having hit a high of $1,261.60 on
Tuesday.
Silver <XAG=>, which normally tracks gold, was steady after
rallying to its highest since March 2008 at $20 an ounce on
Tuesday. Platinum <XPT=> and palladium <XPD=> weakened due to
declines in equities.
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For a graphic showing gold's longest run of yearly
increases in more than 40 years:
http://link.reuters.com/zys99n
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Asian stocks fell and the euro was on the defensive after
renewed fears about the euro zone banking system drove it to
life lows against the Swiss franc and Australian dollar,
hitting financial stocks and dragging equity markets in Europe
and the United States lower. []
"There's a bit of investment buying. It's the same story.
Banks in Europe are not stable and people are buying safe haven
assets," said a dealer in Hong Kong. "We don't see much sale of
gold scrap despite higher prices."
Holdings in the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust, were unchanged at 1,294.442 tonnes,
suggesting that investors held on to bullion because of the
economic uncertainty.
"I think on the physical side, I wouldn't be too worried
about it. It will be the investment demand that will drive the
prices higher," said Ong of Phillip Futures.
"I look at it breaching $1,260, possibly coming down a
little bit and building a base above the $1,250 level."
Bargain buying from jewellers kept premiums for gold bars
steady in Asia, while speculators were keen to cash in after a
rebound in bullion prices, dealers said on Tuesday. []
Oil fell for a third straight session on Wednesday, with
the U.S. benchmark depressed by brimming petroleum stockpiles,
as the dollar jumped and Asian equities declined on investor
attempts to reduce risk exposure. []
Precious metals prices at 0356 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 1256.95 3.85 +0.31 14.72
Spot Silver 19.88 0.05 +0.25 18.12
Spot Platinum 1548.00 -5.03 -0.32 5.52
Spot Palladium 519.50 -1.35 -0.26 28.11
TOCOM Gold 3381.00 -5.00 -0.15 3.74
25053
TOCOM Platinum 4182.00 -63.00 -1.48 -4.54
12674
TOCOM Silver 53.60 -0.40 -0.74 3.68
327
TOCOM Palladium 1398.00 -37.00 -2.58 20.00
286
Euro/Dollar 1.2690
Dollar/Yen 83.40
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Himani Sarkar)
