* Increasing risk appetite reflected in firm stocks
* Largest gold ETF reports 5.8-tonne outflow <XAUEXT-NYS-TT>
* Gold may rally if technical resistance of $945-$955 cleared
By Risa Maeda
TOKYO, July 23 (Reuters) - Gold steadied above $950 per ounce
on Thursday as the dollar stayed near a seven-week low against a
basket of currencies marked the previous day, maintaining
bullion's allure as an alternative asset.
Earlier this month economic worries encouraged investors to
buy the dollar and U.S. Treasuries instead of gold, dragging the
precious metal's price down towards $900.
Now with signs of economic stability, market players'
appetite for other assets including gold and equities is
returning, traders said.
"Investors have a feeling that equity markets are on course
for a recovery from recent lows ... They are less risk-averse
than before," said Dick Poon, manager of precious metals at
Heraeus Ltd in Hong Kong.
"Now that they are buying stocks again, their focus is back
on commodities markets as well," he said.
Spot gold <XAU=> was at $952.50 an ounce at 0600 GMT, up 0.2
percent from the notional New York close of $950.40 on Wednesday.
U.S. gold futures for August delivery <GCQ9> edged down to
$952.70 an ounce, down 0.1 percent from the previous settlement.
On Wednesday the contract rose $6.40 to settle at $953.30 an
ounce on the COMEX division of the New York Mercantile Exchange.
Bullion hit a five-week high of $954.90 on Monday as a
declining greenback and better U.S. corporate earnings boosted
bullion's appeal as an inflation hedge.
But Federal Reserve Chairman Ben Bernanke's remarks earlier
this week vowing to fight inflation kept investors from becoming
overly bullish on gold.
Its gains were also limited by selling to diversify assets
from investors who had bought the precious metal at bargain
prices.
Such selling has been partly behind the recent fall in
holdings by the world's largest gold-backed exchange-traded fund,
the SPDR Gold Trust <GLD>, traders said.
The SPDR Gold Trust said holdings dropped by 5.8 tonnes or
0.5 percent to 1,086.61 tonnes on Wednesday. []
Holdings have declined 47.42 tonnes or 4.2 percent since they
hit a record of 1,134.03 tonnes on June 1.
But traders said gold had the potential to rise towards
$1,000 in the medium term because liquidity remains in financial
markets.
Buying of the precious metal by investors as an inflation
hedge helped push bullion towards $1,000 in June after central
banks and governments around the world pumped massive liquidity
into financial markets to battle the worst economic crisis in
decades.
"When looking at nonferrous metals markets, where money has
been moving from one metal to another and now into copper, we
understand that the markets are basically led by trend
followers," said Naomi Suzuki, a senior analyst at SC Asset
Management Co.
"Such short-term money could easily drive up the gold market
although ETFs and physical buyers are largely absent," she said,
adding that chart-based buying may pick up pace if gold clears
above resistance on the Ichimoku Kinko Hyo chart of $945-$955.
Precious metals prices at 0600 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 953.00 2.60 +0.27 8.28
Spot Silver 13.73 0.05 +0.37 21.29
Spot Platinum 1174.00 2.00 +0.17 25.97
Spot Palladium 255.00 2.50 +0.99 38.21
TOCOM Gold 2898.00 34.00 +1.19 12.63 32174
TOCOM Platinum 3570.00 32.00 +0.90 34.62 9738
TOCOM Silver 417.00 8.80 +2.16 30.60 193
TOCOM Palladium 781.00 14.00 +1.83 42.00 296
Euro/Dollar 1.4244
Dollar/Yen 94.26
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Michael Watson)
