* U.S. auto plan rejection boosts gold
* Precious metals markets eye April 2 G20 meeting
* SPDR holdings rise to record
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By Pratima Desai and Rebekah Curtis
LONDON, March 30 (Reuters) - Gold firmed on Monday as
investors spooked by fresh turmoil in equity markets turned to
the precious metal, but a stronger dollar is expected to cap
gains.
Spot gold <XAU=> was at $928.20/930.20 an ounce at 1432 GMT
compared with $922.10 an ounce late in New York on Friday, and
hit a day's low of $906.9 an ounce. The precious metal fell 3
percent last week, but has held above $900 on buying by
gold-backed exchange traded commodity funds.
Investors use gold as a hedge against financial uncertainty
and inflation, while a higher U.S. currency makes gold priced in
dollars more expensive for holders of other currencies.
"Tendencies on equity markets and the dollar will be the
dominant factors for oil and gold this week," said Barbara
Lambrecht, analyst at Commerzbank.
The dollar extended gains against the euro as worries about
the financial and U.S. auto sectors unnerved investors,
prompting them to take refuge in the relative safety of the U.S.
currency. []
Euro sentiment suffered a blow last week after Germany's
Finance Minister Peer Steinbrueck said budget irresponsibility
in Europe would damage credibility.
"It's the strong dollar. We've gone back to that inverse
relationship that had disappeared between the dollar and gold,"
Stephen Briggs, a commodities strategist at RBS Global Banking &
Markets, said.
Equities tumbled as the Obama administration raised the
spectre of bankruptcy for Chrysler and GM <GM.N> and Spain had
to rescue a regional savings bank. [] []
Markets are looking ahead to the April 2 summit of the
world's 20 biggest economies to discuss regulation and spending
to help end the worst recession since the 1930s. []
VOLATILE QUARTER
A boost for gold was news that investors are still buying
the metal. The world's largest gold-backed exchange-traded fund,
the SPDR Gold Trust <GLD>, said holdings rose 2.45 tonnes to a
record 1,127.44 tonnes on March 29. []
"With this strong investment demand..., at some point gold
will come up," Briggs added.
Gold rose to an 11-month high above $1,000 an ounce on Feb.
20 as worries about the banking crisis escalated and slipped to
$882.90 on March 20 on profit-taking as the dollar rose and
equity markets calmed.
Even before Monday's U.S. rejection of rescue plans for GM
and Chrysler, concern about a major auto industry failure has
been haunting markets, particularly in autocatalyst material
platinum <XPT=>.
Although platinum rose to $1,159 last week, the highest
since last September, its prices have halved since a record high
of $2,290 an ounce hit in March 2008.
"We expect the more industrial-based metals to remain under
pressure in the near term, with the worsening economic
conditions and the slowdown in vehicle sales," Barclays Capital
said in a note.
Platinum <XPT-> was at $1,120.50/1,130.50 an ounce from
$1,123 on Friday, having hit a session low of $1,110.
Silver <XAG=> was at $13.23/13.30 from $13.27, after hitting
a session low of $12.90. Palladium <XPD=> at $214.5/218.5 from
$217.50 and hit a day's low of $208.5.
(For details on the gold holdings of the ETF listed in New
York and co-listed on other exchanges, click on:
http://www.exchangetradedgold.com/iframes/usa.php)
(Editing by James Jukwey)
