* Steadier stock market sentiment seen capping gains
* Asian buyers, ETF investors likely to support prices
(Updates after GFMS, updates prices)
By Veronica Brown
LONDON, April 7 (Reuters) - Gold prices firmed on Tuesday as
investors covered short positions, helping the market to rebound
from 2-1/2 month lows, but a firmer dollar against the euro
weighed on sentiment.
Spot gold <XAU=> was up at $874.90/876 per troy ounce at
1217 GMT after hitting an intraday high of $880.10 and compared
with $868.80 late in New York on Monday.
The dollar and yen rose as equity markets took a sharp turn
lower, fuelled by concerns about the banking sector that wiped
out recent optimism over the global economy. [] []
However, revived investor appetite for so-called riskier
assets such as equities, pushed gold to a 10-week low of $864.30
an ounce on Monday.
"Gold has performed a safe-haven status but with increased
optimism and possibly increased friendliness towards risk ...
the very short-term outlook for gold has been damaged," Gerry
Schubert, director of precious metals at Fortis in London, said.
Gold prices are still down about 13 percent from an 11-month
high above $1,000 hit in February. But analysts said a dose of
reality on the overall vulnerability of the global economy could
well see it topping the $1,000 mark again.
That was reinforced by metals consultancy GFMS, which said
gold may rise through $1,100 an ounce in 2009 as investment is
supported by fears over rising inflation, potential dollar
weakness and financial instability []
INDIA BUYS
Falling bullion prices prompted India to buy some gold
earlier in the global session, raising hopes the world's largest
consumer could be looking for more during the wedding season,
dealers said. []
Though some traders said gold may have been oversold, the
metal remains vulnerable for now to any signs of investors
shifting money into other assets.
"Although investor sentiment remains positive towards the
metal, ETF flows have slowed and prices have been hit with
profit-taking," Barclays Capital said in a note.
"The surge in investment demand had offset the slowdown in
jewellery consumption but now prices remain dependent upon
either further investment demand inflows or resumption in
physical fabrication demand."
In global markets, world stocks steadied after hitting a
two-month high in the previous session as investors awaited the
start of the U.S. corporate earnings season. []
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,127.37
tonnes as of April 6, unchanged from April 3 and just below a
record 1,127.44 tonnes. []
Exchange-traded funds (ETFs), which back up the securities
they issue with physical commodities, are a major element of
demand.
For details on gold holdings at the ETF listed in New York
and co-listed on other exchanges, click on:
http://www.exchangetradedgold.com/iframes/usa.php
In other metals, platinum prices <XPT=> rose to $1,153/1,161
per ounce from $1,140.50 late in New York on Monday.
Platinum prices were seen getting a boost from prospective
investment demand after news on Monday a unit of London's ETF
Securities had filed with the Securities and Exchange Commission
to register platinum and palladium trusts in the United States.
[]
"If approved (this) could trigger significant price gains
again, but is likely to see significant opposition from the
mining sector as well as industrial and auto users," James Moore
of TheBullionDesk.com said in a note to clients.
Palladium also firmed slightly to $223.00/227.00 from
$221.00 on Monday, while silver <XAG=> slipped to $12.05/12.12
from $12.10 on Monday.
(Additional reporting by Pratima Desai; Editing by Sue
Thomas)
