* Gold tracks euro lower, but investment demand supports
* ETF holdings hit record above 805 tonnes
* Nikkei hits 2-month low, oil steady above $44 a barrel
(Updates prices)
By Lewa Pardomuan
SINGAPORE, Jan 22 (Reuters) - Gold dropped slightly on
Thursday to track a falling euro, but strong investment demand
was likely to support prices, with ETF holdings hitting another
record as fears about a worsening global recession lingered.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said it held arecord 805.96 tonnes of
gold as of Jan. 21, up 3.06 tonnes from802.90 tonnes on Jan.
20. []
Gold <XAU=> was trading at $851.95 an ounce, down $2.10
from New York's notional close on Wednesday, but was within
sight of a two-week high of $865.80 hit on Tuesday.
ETF holdings have gone up around 4 percent in the past
month on a combination of worries over economic growth and the
falling interest rate environment, but dealers said bullion may
lack strength to revisit $900, a level last seen in October.
"We are not building a trend here, we've just got a
reaction to a difficult situation. I can't really say that gold
is leading a commodities spike higher," said Darren Heathcote
of Investec Australia in Sydney.
"It just happens to be benefiting from a reaction to a very
difficult market elsewhere. We can't say we're going to break
$900 and stay there, but it's possible that we'll break it.
From one day to the next, the market is very, very fickle."
Gold rallied to a two-month high of $931 in early October
but then dropped to a 13-month low around $680 in the same
month after declines in stock markets forced investors to cash
in to cover losses.
Trading was also choppy in January, with prices falling to
a one-month low around $801 last week, before bargain hunting
pushed up prices. Bullion was below a record high of $1,030.80
hit last March.
The euro <EUR=> slipped to $1.2975 amid anxiety about
global banking woes, with the pounds also resuming falls
against the dollar towards 23-year lows after a government
rescue package for struggling British banks failed to reassure
investors. []
In Asia, China's economic growth slumped to 6.8 percent
last quarter, dragging down the pace of expansion for all of
2008 to a seven-year low of 9.0 percent as the full forMce of
the global financial crisis struck home. []
"Given the current performance of the stock markets, I
think investors shift some of their money to precious metals.
Funds have driven up prices but it's not necessarily the
fundamentals," said a dealer in Hong Kong.
"Gold may try the highs but if it fails to sustain the
gains, then we will see a very sharp reversal," he said.
Asia shares clung to small gains, with investors reassured
after bank shares fuelled a Wall Street rally, but with global
economic gloom still pervasive, safe-haven trades such as the
yen and U.S. Treasuries also rose. []
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> was up 0.7 percent, while Japan's Nikkei
average <> hit a two-month low.
Oil <CLc1> was steady around $44 a barrel.
Platinum <XPT=> was trading at $930.00 an ounce, up $6.50
from New York's notional close.
New York gold futures <GCZ9> added $2.9 an ounce to $853.0
in electronic trade.
Precious metals prices at 0258 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 851.95 -2.10 -0.25 2.31
Spot Silver 11.27 -0.04 -0.35 -23.70
Spot Platinum 930.00 6.50 +0.70 -38.82
Spot Palladium 181.50 -2.00 -1.09 -50.68
TOCOM Gold 2460.00 8.00 +0.33 -19.61
16140
TOCOM Platinum 2689.00 5.00 +0.19 -49.63
4711
TOCOM Silver 320.50 1.70 +0.53 -40.76
81
TOCOM Palladium 535.00 7.00 +1.33 -60.40
38
Euro/Dollar 1.3010
Dollar/Yen 89.12
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Clarence Fernandez)
