* SPDR stays at record high
* Wary of dollar strength, general risk aversion supports
By Chikako Mogi
TOKYO, March 31 (Reuters) - Gold was steady on Tuesday,
weighed down by a stronger dollar but propped up by risk
aversion on worries about potential failures of two major U.S.
automakers and the health of the European banking system.
Tumbling stocks worldwide on these concerns had prompted
investors to sell gold on Monday to cover losses in other
assets.
But gold was likely to benefit eventually as investors
regard bullion as a hedge against risk, as well as against
inflation.
"Basically, I still think that risk aversion will still be
the factor to look at as I don't think the global economy is
out of its doldrums as of yet," said Adrian Koh, an analyst at
Phillip Futures.
"There has been talk about 'green shoots' and possible
signs of improvement, but I think it's still a little too early
and even if it's true, the markets probably will take on a more
sideward trend," he said.
Gold <XAU=> was at $917.30 per ounce at 0520 GMT, little
changed from New York's notional close of $916.30, having
touched a session high above $919 as Tokyo shares wiped out
earlier gains and turned negative. Gold is up about 4 percent
on the quarter.
Bullion is trapped in a tight range, having recovered about
4 percent from a six-week low of $882.90 hit on March 18, but 9
percent off the 11-month high above $1,000 set in February.
"I still think it will continue to trade in a volatile
fashion with safe haven keeping prices supported while scrap
selling and a higher dollar could cap any rise," Koh said,
looking ahead to the coming quarter.
For the time being, there is very little opportunity for
gold to break above $940, but support is seen firm around $890,
said Darren Heathcote, head of trading at Investec Australia.
He added that gold will likely be capped by the dollar's
strength as the currency's impact has been larger recently, and
expected to see significant swings in prices over the next
month.
"There are so many questions unanswered, such as whether
the stimulus packages would be sufficient or would come in a
timely manner, which leaves the market open to speculation and
further volatility, unsettling investors," he said.
A higher U.S. currency makes gold priced in dollars more
expensive for holders of other currencies.
The dollar was up 0.9 percent against the yen on Tuesday
but down 0.3 percent against the euro, after gaining against
major currencies the previous day on rising safe-haven flows.
[]
Gold has held firmly above $900 thanks to buying related to
gold-backed securities.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings stayed unchanged at a
record 1,127.44 tonnes as of March 30, a level first reached on
March 29. []
Prices as of 0520 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 917.00 0.70 +0.08 4.19
Spot Silver 13.10 0.07 +0.54 15.72
Spot Platinum 1123.50 11.50 +1.03 20.55
Spot Palladium 213.00 -0.50 -0.23 15.45
TOCOM Gold 2907.00 24.00 +0.83 12.98
33473
TOCOM Platinum 3582.00 77.00 +2.20 35.07
9925
TOCOM Silver 412.20 3.60 +0.88 29.09
668
TOCOM Palladium 676.00 12.00 +1.81 22.91
489
Euro/Dollar 1.3237
Dollar/Yen 98.06
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 Urquhart)
