* Upbeat economic view lifts cyclical assets, pressures gold
* Egypt unrest lends support as Chinese buying stalls
* Palladium flirts with 10-year high after car sales rise
(Updates prices)
By Jan Harvey
LONDON, Feb 2 (Reuters) - Gold prices eased on Wednesday
after well-received U.S. economic data and a spate of upbeat
corporate earnings deflected interest away from bullion on to
higher-risk, higher-yielding assets.
Concern over unrest in Egypt and the prospect that it could
spread into the wider Middle East is continuing to put a floor
on prices, though it is prompting little new buying.
Spot gold <XAU=> was bid at $1,335.45 an ounce at 1551 GMT,
against $1,340.45 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ1> fell $5.20 an ounce to $1,335.10.
Peter Hillyard, an analyst at ANZ Bank in London, said gold
was lacking direction after its retreat from December's record
high above $1,430 an ounce.
"The sell-off seemed to illustrate that people had lost
faith in gold and could see much better places to invest," he
said. "(But) I don't think people want to sell it. They are
fearful about what is going to happen in the Middle East, and
what really is going on in the markets.
"By the same token, they are wondering, if they buy it, what
the upside is. So they are on the sidelines."
World stocks hit 29-month highs on Wednesday, with strong
factory data pointing to sustained global economic recovery and
positive corporate earnings fuelling gains. []
European shares also rose, while U.S. stocks held their
ground after the Dow and S&P advanced to their highest close in
about 2-1/2 years on Tuesday. [] []
With confidence in the economic recovery growing and concern
over euro zone sovereign debt abating, gold may lose some of its
appeal as a haven, analysts say, though support remains.
"In an environment of negative real interest rates, we
expect gold's 'store-of-value' characteristic to keep it well
supported at the $1,400-1,450 an ounce level during 2011," said
Citigroup analysts in a note.
"However, with signs of the past three years' risk-trade
dissipating as confidence is seemingly restored in developed
market economies, we caution that risks to our gold price
outlook are probably skewed to the downside."
EGYPT LENDS SUPPORT
Concern over unrest in Egypt continued to support gold
prices, however.
Opponents and supporters of President Hosni Mubarak fought
with fists, stones and clubs in Cairo on Wednesday in what
appeared to be a move by forces loyal to the Egyptian leader to
end protests calling for him to quit. []
Mubarak's announcement that he would not stand in elections
scheduled for September had angered protesters who want an
immediate end to his 30-year rule.
"Political turmoil in Egypt couldn't have come at a better
time for gold," said UBS in a note. "With demand from China, the
largest physical consumer of late, slowing into the Lunar New
Year, geopolitical risk has provided a new support.
"Not that events in Egypt have injected a premium into the
gold price - they have not - but they have kept more weak longs
from liquidating and induced some short-covering."
Among other precious metals, palladium rose towards its
highest in nearly a decade after upbeat car sales numbers. The
majority of palladium is used in catalytic converters.
General Motors Co <GM.M> and Chrysler posted U.S. sales
gains of more than 20 percent for January, while U.S. auto sales
rose 17 percent. []
Platinum <XPT=> was at $1,827.49 an ounce against $1,825,
while palladium <XPD=> was at $817.22 against $819.47, having
earlier matched its highest since March 2001 at $825.50. Silver
<XAG=> was bid at $28.47 an ounce against $28.49.
(Editing by Alison Birrane)
