* Rise in stock markets dents gold's appeal
* SPDR gold ETF sees outflow; iShares Silver hits record
* Indian jewellery demand picks up as prices fall
(Updates throughout, changes dateline - pvs TOKYO)
By Jan Harvey
LONDON, April 6 (Reuters) - Gold slid 2 percent in Europe on
Monday as hopes the global economy may be bottoming sparked a
rally in stock markets and industrial commodity prices, denting
gold's appeal as a haven.
Spot gold <XAU=> fell to a low of $873.45 an ounce and was
quoted at $880.65/882.15 an ounce at 0905 GMT from $892.50 late
in New York on Friday.
Analysts say a surge in equity prices suggests investors are
selling gold in favour of stocks and shares.
"The stock markets last week put up a good performance and
the non-farm payrolls figures out of the United States were not
glorious, but people had anticipated even worse," said Afshin
Nabavi, head of trading at MKS Finance.
"The market is a little nervous," he said. "$875 is a very
important support and there will be difficulty breaking it down,
but from the look of things at the moment, it wouldn't be
impossible to see the low we made in January this year."
European shares rose early on Monday, after Asian stocks
climbed to a six-month high on hopes that the global economic
downturn was nearing a bottom. []
Industrial commodity prices also climbed on hopes a recovery
in the beleaguered economy could resuscitate demand. Base metals
such as copper climbed, while oil prices gained more than $1 a
barrel. [] []
On the currency markets, the yen fell broadly as investors
took on perceived riskier assets on growing hopes there is light
at the end of the tunnel for the ailing global economy. []
The dollar slipped a touch against the euro. A weaker dollar
usually benefits gold, which is often bought as an alternative
investment to the U.S. currency. However, the usual relationship
between the two has faltered as both react to risk aversion.
OUTFLOW
Meanwhile, the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, said it recorded a small
outflow on Friday from record levels.
ETFs issue securities backed by physical stocks of a
precious metal. Buying by the funds has been a major element of
overall gold demand in recent months as the financial crisis has
fuelled interest in physical assets.
The recent fall in prices has revived demand from another
source, however, with Indian jewellery sales picking up ahead of
the key gold-buying Akshaya Tritya festival later this month.
[]
"The gold market is showing clear signs of improved near-term
fundamentals: scrap supply is much slower since gold fell below
$930/oz," said UBS in a note.
"Patchy jewellery demand was seen late last week when gold
was near the week's lows; and this morning our traders report
Indian clients calling to buy gold... because it is now cheap."
Among other precious metals, spot platinum <XPT=> eased to
$1,149/1,159 an ounce from $1,154.50, while spot palladium
<XPD=> was little changed at $219/224 an ounce from $218.
Silver <XAG=> dipped to $12.51/12.58 an ounce from $12.71.
The world's largest silver-backed ETF, the iShares Silver
Trust <SLV>, said its holdings rose 119.55 tonnes or 1.4 percent
from the day before to a record 8,413.01 tonnes on Apr 3.
[]
(Reporting by Jan Harvey; Editing by Peter Blackburn)
