* Gold falls further in late afternoon trading
* U.S. govt unveils plan to cleanse banks of toxic assets
* SPDR holdings hit a record 1,114.60 tonnes.
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Pratima Desai
NEW YORK/LONDON, March 23 (Reuters) - Gold fell more than 1
percent on Monday as investors moved away from the safe haven
amid a rally on Wall Street sparked by a U.S. government plan
to relieve banks of toxic assets.
In a bid to pull the world's biggest economy out of a deep
recession, the U.S. government fleshed out a plan it hopes can
purge banks of up to $1 trillion in toxic assets, which boosted
world stocks and oil prices. []
The U.S. plan sparked a sharp rally in U.S. and European
equities, which is negative for bullion. Wall Street surged on
economic optimism, with the Dow industrials adding over 400
points and the S&P 500 jumped more than 5 percent. []
Spot gold accelerated losses in late sessions. It <XAU=>
was at $939.60 an ounce at 3:30 p.m. EDT (1930 GMT), down 1.3
percent from its last quote $950.90 in New York late Friday.
Profit taking seen after bullion rose as high as $966.70 an
ounce on Friday, the loftiest price since Feb. 25.
U.S. gold futures for April delivery <GCJ9> settled down
$3.70 at $952.50 an ounce on the COMEX division of the New York
Mercantile Exchange.
Gold is used as a hedge against financial uncertainty and
against inflation, which is expected to take off because of the
vast amounts of money being piped into the global economy by
central banks and governments.
The expectations of the U.S. dollar weakening further in
the longer term following the plan to buy long-dated U.S.
Treasuries helped bullion to limit its losses.
THICK AND FAST
Many fearing wealth erosion from inflation and the banking
crisis have headed for the safety of gold-backed exchange
traded funds such as SPDR Gold Trust <GLD>, the world's
largest.
SPDR's holdings hit a record 1,114.60 tonnes as of March
20, up 11.31 tonnes or 1 percent from the previous day.
[]
However, the gold market remains vulnerable to plans for
stimulus, coming thick and fast for some months now, analysts
said.
"We expect the possibility of further Fed action will
support the economic outlook and increase risk appetite over
time and potentially slow inflows into gold exchange traded
funds," Deutsche Bank said in a note.
Fading interest could take gold further away from the
record high of $1,030.80 an ounce hit in March 2008.
Prices of precious industrial metals also held firm on
expectations that a demand recovery could be in the pipeline.
Spot silver <XAG=> was at $13.63 an ounce, down 0.6 percent
from its Friday finish of $13.72 late in New York on Friday,
palladium <XPD=> traded at at $206.00 an ounce, up 0.7 percent
from its late Friday New York quote of $204.50 and platinum
<XPT=> was at $1,125.00 an ounce, up 1.1 percent from its
previous close of $1,112.50.
Platinum used in autocatalysts has been hard hit by the
downturn in the auto sector in recent months.
But news that Abu Dhabi government-linked Aabar Investment
<AABAR.AD> completed a $1.82 billion capital hike after taking
a 9.1 percent stake in Daimler <DAIGn.DE> had helped the mood
in the platinum market, traders said. []
Reinforcing that was Goldman Sachs, which raised its view
on the European auto sector to "attractive" on expectations
that the worst was over. []
(With additional reporting by Frank Tang in New York, Humeyra
Pamuk in London; editing by Lisa Shumaker)
