* Physical buying supports, as safe-haven buying wanes
* Persistent worries about financial industry seen
supporting
By Miho Yoshikawa
TOKYO, April 22 (Reuters) - Gold prices inched up to hover
around $885 an ounce on Wednesday, supported by physical demand
that helped offset waning investor interest in gold as a
safe-haven asset.
Still, the market continues to watch for signs of trouble
in the financial industry, which could once again enhance
gold's allure among investors.
"I think physical demand has picked up a bit, perhaps from
the Indian side," said Adrian Koh, an analyst at Phillip
Futures.
"That's probably why we saw a bit of a run up on gold
prices over the past couple of days," he said.
Gold was trading at $884.20 an ounce <XAU=> at 0612 GMT,
0.2 percent higher than New York's notional close of $882.25 on
Tuesday.
Gold imports by India, the world's largest consumer of the
precious metal, are set to grow by a quarter in April from a
year ago, the first rise since August, the head of metals
trading firm MMTC Ltd <MMTC.BO> said on Tuesday.
[]
This is in sharp contrast to February and March, when gold
imports dropped to almost zero.
But demand for gold as an investment was seen taking a
break.
Global share prices arrested declines after U.S. Treasury
Secretary Timothy Geithner said most U.S. banks are well
capitalised, helping ease credit jitters that had previously
heightened bullion's appeal.
Financial markets are eagerly awaiting the outcome of U.S.
authorities' stress tests on banks.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings remained unchanged at
1,105.98 tonnes as of April 21 after investor outflows early
this week reached their biggest since early September.
But the holdings are still in sight of a record 1,127.68
tonnes, first marked on April 9. []
"Physical demand for gold remains from India and China, and
SPDR, while it shed some 20 tonnes, remains at a historically
high level, supported by long-term investors," said Shuji
Sugata, a manager at Mitsubishi Corp Futures & Securities.
He sid that while gold may come under pressure if stock
markets perform well, concerns over the health of U.S. banks
would continue to lend support.
"I think $850-$860 looks firm," Sugata said.
The dollar shed 0.4 percent to 98.32 yen <JPY=> after
gaining 0.8 percent on Tuesday. It hit a six-month high of
101.45 on April 6 but has gradually fallen since then, making
gold cheaper in non-dollar terms. []
PRICES
Precious metals prices at 0610 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 884.10 1.85 +0.21 0.45
Spot Silver 12.07 0.08 +0.67 6.63
Spot Platinum 1161.00 8.50 +0.74 24.57
Spot Palladium 223.00 1.00 +0.45 20.87
TOCOM Gold 2809.00 -7.00 -0.25 9.17
15454
TOCOM Platinum 3689.00 -1.00 -0.03 39.10
13311
TOCOM Silver 380.00 -2.00 -0.52 19.01
184
TOCOM Palladium 714.00 -5.00 -0.70 29.82
494
Euro/Dollar 1.2940
Dollar/Yen 98.41
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 Chikako Mogi; Editing by Michael
Urquhart)
