* Equities slip for second day running on flu fears
* SPDR gold holdings unchanged for second session
* ECB says plans to renew Central Bank Gold Agreement
(Updates prices)
By Jan Harvey
LONDON, April 28 (Reuters) - Gold slipped 2.2 percent to
below $890 an ounce in Europe on Tuesday on technical selling,
with traders disappointed over the metal's failure to sustain
its rally to a near four-week high in the previous session.
Losses in gold pressured the other precious metals, with
platinum and palladium both falling 5 percent and silver down 4
percent.
Spot gold <XAU=> was bid at $887.45 an ounce at 1234 GMT,
against $906.75 an ounce late in New York on Monday.
The precious metal made good gains on Monday as the equity
markets slipped due partly to fears a swine flu outbreak could
hurt the economy, and on hopes China would continue to buy gold.
But its failure to sustain those gains through technical
resistance at $918.50 an ounce, identified by analysts who study
charts of past price movements, sparked selling.
"Formidable resistance is restricting gold from inching
higher," said Pradeep Unni, senior analyst at Richcomm Global
Services.
The boost lent to the metal by news that China has increased
its gold reserves by three-quarters since 2003 has largely
petered out, traders said.
Nout Wellink, a member of the governing council of the
European Central Bank, said on Tuesday China's move to diversify
its reserves was a "positive development", but that is was not a
surprise. []
He also said the bank planned to renew the Central Bank Gold
Agreement, which restricts signatories' gold sales to 500 tonnes
a year, when it expires in September, although he would not
comment on the sales level.
Physical demand for the precious metal is also weak.
Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, were unchanged on Monday for
second session, and are down nearly 23 tonnes month-on-month.
[]
"(There is) still no interest on the physical front," said
Afshin Nabavi, head of trading at MKS Finance in Geneva.
Demand for the metal in India, the world's largest bullion
buyer, has picked up a touch ahead of the wedding season but is
still lower year-on-year. []
Traders said gold demand for the Akshaya Tritya festival on
Monday was down 20-40 percent on the year as high prices and the
spectre of recession hit buying.
PANDEMIC
On the wider markets, equities declined sharply once again
in Europe after a weak session in Asia, as concerns over the
potential for a flu pandemic to hurt the economy spread, while
the dollar was steady against the euro. [] []
Oil prices slipped below $49 a barrel, extending Monday's
losses, as declines on global stock markets and fears the
airline industry could be hit by a global flu pandemic raised
expectations for a fresh decline in demand. []
Gold typically tracks oil prices, which are a key driver of
inflation, against which the precious metal is often bought as a
hedge.
Traders are awaiting fresh direction from the outcome of a
two-day meeting of the U.S. Federal Open Market Committee.
"The FOMC meeting will be closely monitored on Wednesday and
any more statements on quantitative easing would help to limit
losses in the precious metal," said VTB Capital in a note.
Among other precious metals, spot platinum <XPT=> fell nearly
5 percent to $1,083 an ounce against $1,139, while spot
palladium <XPD=> fell to a low of $211.50 and was later bid at
$212.50 an ounce against $223.
The metals, chiefly used in autocatalyst manufacturing, have
suffered from a decline in the car industry over the last year.
More bad news for carmakers emerged on Monday as General
Motors <GM.N> offered its final reorganisation plan by slashing
bond debt, cutting over 21,000 more U.S. jobs and emerging as a
nationalised carmaker under the control of the U.S. government.
Platinum is also being pressured by weakness in other
precious metals. "With gold on a negative footing, platinum is
finding itself in very difficult waters," one analyst said.
Silver <XAG=> was bid at $12.39 an ounce against $12.89.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
