* Gold edges up on light physical buying in Asia
* Capped at $890, with traders eyeing Dow, dollar
(Adds details, updates prices)
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 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 yellow metal's failure to break above $900 recently
shows that demand from investors and industry and jewellery
buyers may be weakening.
On the other hand, gold has held above its 200-day moving
average of $855.20, suggesting it still has momentum.
"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.
Gold rallied almost 2 percent on Monday as the Dow Jones
industrial average <> sank 3.6 percent after Bank of
America <BAC.N> reported a jump in non-performing assets,
underscoring troubles in the banking sector. []
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 $887.00 per ounce by 0626 GMT, up
0.3 percent from the notional close in New York of $884.15.
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.
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 Suzuki 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.
In Asia, buying could continue for a while before seasonal
demand from India peaks out and Japan and China enter a long
holiday season at the beginning of May, traders said.
India, the world's biggest bullion consumer, celebrates the
Akshaya Tritiya festival on April 27, when Hindus buy gold to
encourage prosperity.
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 0.7 percent at $1,151.50 an
ounce. Spot palladium <XPD=> was at $222 an ounce, down 1.6
percent from New York's notional close.
Precious metals prices at 0623 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 886.20 2.05 +0.23 6.42
Spot Silver 12.11 0.07 +0.58 -18.01
Spot Platinum 1150.00 -9.50 -0.82 -24.34
Spot Palladium 222.00 -3.50 -1.55 -39.67
TOCOM Gold 2813.00 30.00 +1.08 -8.07
23541
TOCOM Platinum 3655.00 -98.00 -2.61 -31.54
24120
TOCOM Silver 380.60 0.00 +0.00 -29.65
362
TOCOM Palladium 718.00 -22.00 -2.97 -46.85
819
Euro/Dollar 1.2931
Dollar/Yen 98.23
(Additional reporting by Miho Yoshikawa)
(Editing by Clarence Fernandez)
