* Investor demand tested as ETF buying stalls
* Support holds as financial and economic worries persist
* Prices seen capped at $900, supported around $865
By Chikako Mogi
TOKYO, April 23 (Reuters) - Gold nudged up on Thursday,
adding to gains from the previous session on concern about the
global economy and the financial sector, as well as physical
buying in India, the world's largest consumer.
But the market lacked momentum to push towards the key $900
mark, weighed down by stalling investment in the world's
largest gold-backed exchange-traded fund.
Gold <XAU=> was trading at $891.00 per ounce at 0600 GMT,
up 0.2 percent from the notional close in New York of $889.15.
On Wednesday, it rose 0.8 percent.
Gold last closed above $900 on April 2 and fell as low as
$864.00 on Friday, its lowest since Jan. 23.
"The market is rising slightly but I don't think it will
break above $900, which has become a critical level," said Y.H.
Chan, deputy manager at Bank of China in Hong Kong.
"The market is still in a bearish trend," he said, adding
that it could test $865 again, at which point physical demand
may pick up steam.
Buying from India ahead of the Akshaya Tritya festival on
April 27, an auspicious time for gold buying, continues to lend
support.
Also, while some risk appetite has returned in recent weeks
with stocks recovering from their lows, investor preference for
gold as a safe-haven asset remained intact, traders said.
The International Monetary Fund on Wednesday slashed its
growth forecasts for every major country and urged governments
to take forceful action to ensure the world economy's recovery
from a severe recession. []
And U.S. banking woes continue, with Morgan Stanley <MS.N>
posting a wider-than-expected quarterly loss on Wednesday and
slashing its dividend. []
One factor weighing on market sentiment was that the
holdings of the SPDR Gold Trust <XAUEXT-NYS-TT> have stayed at
1,105.98 tonnes, after investor outflows early this week
reached their biggest since early September. []
A trader at a Japanese trading house said some funds may be
looking at U.S. Treasury yields for clues about whether to
invest in gold ETFs.
"Funds don't appear to be taking positions aggressively,
keeping their long positions more or less steady. Treasury
yields have been stable but if they start to climb, it could
trigger money to flow out of gold," he said.
The benchmark 10-year U.S. Treasury yield <US10YT=RR> has
stayed mostly between 2.5 and 3 percent this year, after
plunging below 2.1 percent in late December as the global
financial crisis deepened in the wake of the collapse of Lehman
Brothers.
A 44 percent surge in the SPDR's holdings since the start
of the year had helped underpin gold prices, but the last
increase was nearly a month ago.
"The ETF has a strong impact on gold prices. The market is
very quiet, as the holdings remain unchanged," Chan said.
PRICES
Precious metals prices at 0603 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 891.10 1.95 +0.22 1.24
Spot Silver 12.35 0.07 +0.57 9.10
Spot Platinum 1160.50 -8.00 -0.68 24.52
Spot Palladium 229.00 -1.00 -0.43 24.12
TOCOM Gold 2820.00 11.00 +0.39 9.60
15724
TOCOM Platinum 3674.00 40.00 +1.10 38.54
11068
TOCOM Silver 387.30 7.90 +2.08 21.30
314
TOCOM Palladium 727.00 13.00 +1.82 32.18
294
Euro/Dollar 1.3019
Dollar/Yen 98.01
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 Risa Maeda; Editing by Michael
Urquhart)
