* Gold edges up on light physical buying in Asia
* Capped at $890, with traders eyeing Dow, dollar
By Risa Maeda
TOKYO, April 21 (Reuters) - Gold edged up on Tuesday,
helped by light physical buying after a sharp rise a day
earlier when worries over the health of the U.S. banking sector
dragged down equities and enhanced gold's safe-haven appeal.
But it was capped at around $890 per ounce as traders were
unsure if the upward momentum led by short-term investors was
sustainable, preferring to see how European and U.S. equities
performed before taking bigger positions.
"The market wants to take a look at the Dow Jones tonight
and Europe's stock markets as well," said Dick Poon, a division
manager of precious metals at Heraeus Ltd in Hong Kong.
Traders also said a further rise in the dollar against the
euro <EUR=> could undermine gold prices. A higher dollar makes
dollar-priced bullion more expensive for non-U.S. investors.
Spot gold <XAU=> stood at $886.0 per ounce by 0331 GMT, up
0.2 percent from the notional close in New York of $884.15.
Gold rallied almost 2 percent on Monday, after the Dow
Jones industrial average <> sank 3.6 percent as Bank of
America <BAC.N> reported a jump in non-performing assets,
underscoring troubles in the banking sector. []
Holdings at the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, remained unchanged on
Monday. []
But the holdings fell 21.7 tonnes, or nearly 2 percent, on
Thursday and Friday, when the Dow rallied to two-month highs.
Naomi Suzuki, a senior analyst at SC Asset Management Co,
said the two-day sell-off was double India's gold imports in
the first 15 days of April, which had been sharply up from zero
in March.
"The only reason that gold fell was the massive sell-off in
the ETF, if it weren't for that the market would have gained
ground," Suzuki said, but added that renewed investor risk
aversion this week was supporting gold.
"When stocks are down and market volatility is up like it
is now, it's natural for investors to grow cautious about
selling," she said.
Investment demand had helped send gold to above $1,000 an
ounce in late February, after which bullion fell 14 percent to
a three-month low of $864 marked late last week.
But gold's failure to break above $900 recently illustrates
fading demand from investors as well as from industry and
jewellery buyers.
Among other precious metals, platinum and palladium stayed
under pressure from renewed concerns about the banking sector
and its impact on the global economy, traders said.
Spot platinum <XPT=> was down almost 1 percent at $1,149 an
ounce. Spot palladium <XPD=> was at $220 an ounce, down 2.4
percent from New York's notional close.
Precious metals prices at 0329 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 886.35 2.20 +0.25 6.44
Spot Silver 12.14 0.10 +0.83 -17.81
Spot Platinum 1146.00 -13.50 -1.16 -24.61
Spot Palladium 220.00 -5.50 -2.44 -40.22
TOCOM Gold 2805.00 22.00 +0.79 -8.33
14252
TOCOM Platinum 3640.00 -113.00 -3.01 -31.82
15760
TOCOM Silver 381.10 0.50 +0.13 -29.56
192
TOCOM Palladium 704.00 -36.00 -4.86 -47.89
517
Euro/Dollar 1.2939
Dollar/Yen 98.24
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 Miho Yoshikawa; Editing by Clarence
Fernandez)
