* Worries about global economy, deflationary pressure weigh
* Weakness in stocks and other assets supports safety appeal
* Gold caught in tug-of-war with limited upside and downside
* Coming Up: Fed's Aug. 10 minutes at 1800 GMT
By Chikako Mogi
TOKYO, Aug 31 (Reuters) - Gold was steady on Tuesday as
investors eyed U.S. economic data due this week for clues to the
strength of the world's largest economy while looking at equities
to gauge investor risk appetite.
Gold has benefited from worries about the U.S. economy and
weakness in other markets that highlight bullion's appeal as a
safe haven or alternative investment.
But at the same time, concerns about an economic slowdown in
major economies such as the United States, the euro zone and
Japan, and deepening deflationary pressures are dampening the
metal's role as an inflation hedge, analysts said.
"Gold is caught in a bind, with limited upside and downside,"
said Kazuhiko Saito, chief commodities analyst at Tokyo-based
trading firm Fujitomi Co.
"Slowing growth and deflation worries are generally negative
for commodities, putting a cap on gold prices as well. At the
same time, easy monetary policy continues to keep expectations
alive that investment funds will return to gold, putting a firm
floor under market prices," he said.
Spot gold <XAU=> was at $1,235.25 an ounce as of 0529 GMT,
compared with $1,236.66 an ounce late in New York on Monday.
Gold rose on Monday, starting its fifth straight week in
positive territory.
At current levels, gold is up about 5.2 percent on the month,
the largest monthly gain since April. Spot gold hit a two-month
high at $1,244.00 an ounce last week.
U.S. gold futures for December delivery <GCZ0> were also
steady, at $1,237.10 an ounce, versus $1,239.20 on Monday.
Gold prices were weighed down by a drop in U.S. crude
futures.
Oil fell below $74 on Tuesday, extending losses for a second
day, as expectations of higher crude inventories fed fears that a
slowdown in global economic growth was hitting demand. []
Traders said activity was likely to remain muted as market
players await a series of U.S. data due this week.
President Barack Obama, under pressure to bolster the U.S.
economy, said on Monday he and his economic advisers are
discussing additional steps to generate job growth such as more
tax cuts for businesses. []
Fujitomi's Saito said traders were eyeing U.S. ADP private
sector employment figures due on Wednesday, which could help
predict the outcome of Friday's U.S. non-farm payrolls report.
Later on Tuesday the Federal Reserve will release minutes of
its Aug. 10 meeting, offering investors further insight into the
U.S. central bank's decision to buy more longer-term Treasury
securities in the face of a weakening economy. []
With the market trading in a narrow range, the world's
largest gold-backed exchange-traded fund, the SPDR Gold Trust
<GLD>, said its holdings were unchanged at 1,298.556 tonnes as of
Aug. 30. The holdings hit a record at 1,320.436 tonnes on June
29. []
Elsewhere, Tokyo stocks <> slid 3 percent, their worst
daily drop in three months, after the Bank of Japan's emergency
moves the day before failed to curb the yen's strength and
disheartened investors bailed out of the market. []
In other metals, silver <XAG=> eased to $18.92 an ounce from
Monday's late price at $18.96. The metal hit a two-month high of
$19.32 last week.
PRICES
Precious metals prices at 0530 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1235.00 -1.66 -0.13 12.71
Spot Silver 18.92 -0.04 -0.21 12.42
Spot Platinum 1511.50 -13.70 -0.90 3.03
Spot Palladium 487.05 -6.88 -1.39 20.11
TOCOM Gold 3355 -30.00 -0.89 2.95 32202
TOCOM Platinum 4123 -101.00 -2.39 -5.89 17465
TOCOM Silver 52 -0.80 -1.52 0.19 497
TOCOM Palladium 1330 -58.00 -4.18 14.16 546
Euro/Dollar 1.2659
Dollar/Yen 84.2400
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Reporting by Chikako Mogi; Editing by Chris Gallagher)
