* Stock weakness bolsters alternative investment appeal
* Strong physical buying seen supportive to prices
* Platinum group metals weighed by poor economic data
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline, changes byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Dec 9 (Reuters) - Gold futures ended
slightly higher on Tuesday as weaker stock markets bolstered
bullion's appeal as an alternative investment.
"The gold market has been moving sideways, waiting for
further development in the financial markets. As the stock
market shows signs of prosperity, gold buyers will become more
aggressive in returning," said George Nickas, commodity broker
at FC Stone.
U.S. stocks turned lower sharply after rallying in the
previous two sessions, as investors mulled whether recent gains
have staying power. []
Spot gold <XAU=> was at $773.25 at 2:42 p.m. EST (1942
GMT), up 0.3 percent from Monday's close of $771.30.
U.S. gold for February delivery <GCG9> settled up $4.90 at
$774.20 an ounce on the COMEX division of the New York
Mercantile Exchange.
Gold held onto gains in spite of a sharp drop of oil, the
other main external driver of gold. U.S. crude futures <CLc1>
ended down nearly $2 at $42.07 per barrel.
Falling crude prices can undermine confidence in
commodities as an asset class, and dent interest in gold as a
hedge against oil-led inflation.
Meanwhile, market talk of a gold sale by the International
Monetary Fund failed to dampen sentiment.
In April, the IMF had agreed to put its finances on sounder
footing by selling some of its gold and investing in other
asset classes such as bonds or equities.
However, approval of the U.S. Congress will be needed
before any gold sales could begin.
PHYSICAL DEMAND SEEN SUPPORTIVE
In addition, resilient physical gold demand should boost
prices in the near term, analysts said.
Thom Calandra, natural resources analyst and chief
columnist for Stockhouse.com, said that high gold leasing rates
<LGLR> and the lofty premium of gold coins and bars
underscored strong physical buying.
"That demand is not currently reflected in the futures
prices and other paper prices," Calandra said.
Among the other precious metals, platinum slipped a touch
as investors worried slowing economic activity would hit demand
for the metal, which is chiefly used to make catalytic
converters.
Economic news was weak on Tuesday. Data showed Japan's
economy contracted at a faster pace than anticipated in the
third quarter, while British industrial output fell at its
sharpest pace in nearly six years in October. []
A survey from the Organisation for Economic Co-operation
and Development (OECD) also said the U.S. economy will probably
get worse before it gets better. []
News on Monday of developments in U.S. government plans to
bail out ailing carmakers boosted the precious metal that
session, but the fillip was short-lived.
Spot platinum <XPT=> at $800 an ounce, down 2.6 percent
from its previous finish of $821 late in New York on Monday,
while palladium <XPD=> was at $174.00, which was 0.6 percent
higher than Monday's late quote of $173.
Spot silver <XAG=> was at $9.79, which was 1.6 percent
lower than its Monday close of $9.95.
(Reporting by Frank Tang; Editing by Marguerita Choy)
