* SPDR Gold Trust hits new record just below 1,000 tonnes
* U.S. markets closed for Presidents Day holiday
(Updates prices)
By Jan Harvey
LONDON, Feb 16 (Reuters) - Gold was little changed in Europe
on Monday, consolidating after last week's more than 3 percent
rise, with strong demand for physical investment products such as
gold-backed exchange-traded funds supporting prices.
The closure of the U.S. markets for the Presidents Day
holiday is likely to keep traders on the sidelines this session.
Spot gold <XAU=> was little changed at $940.20/942.20 an
ounce at 1233 GMT from $939.40 late in New York late on Friday.
Bullion prices rose nearly $30 an ounce last week as concern
over the economic outlook and turmoil in the financial sector
prompted investors to buy the metal as a haven from risk.
Wolfgang Wrzesniok-Rossbach, head of sales at precious
metals group Heraeus, said however that with jewellery demand
soft, gold was likely to consolidate before its next leg higher.
"The trend for the next hours and days is probably a little
lower before we make a new attempt higher," he said. "Between
$935 and $930, there is danger that the metal will break (its)
recent uptrend, and then we might head a little lower."
But turmoil in the financial markets and economic worries
are still supporting demand for gold as a safe store of value.
Equities fell on Monday after a lack of concrete action
following a G7 meeting this weekend and as data showed Japan is
sinking deeper into recession. Japan reported its worst
quarterly contraction in 35 years on Monday. []
Fear-driven demand for investment products is helping
balance a drop-off in jewellery buying in traditional gold
markets such as China, India and the Middle East.
The world's largest gold-backed ETF, New York's SPDR Gold
Trust <GLD>, said its holdings rose more than 15 tonnes to a
record 985.86 tonnes on Friday. The trust's gold holdings are up
more than 205 tonnes or 26 percent so far this year.
But India's gold demand was slack on Monday as high prices
put traders off purchases. "Gold demand is very sluggish, and
everybody is waiting for a dip to $900-$920," said a dealer at a
state-run bank in Mumbai. []
The head of the Bombay Bullion Association said on Friday
that there have been no gold imports into India so far in
February. []
Scrap supply from India and China is rising, however, as the
climb in spot prices prompts existing gold holders to cash in
gains. []
DIRECTION
Gold took little direction from its usual main external
drivers, the dollar and oil prices.
The dollar gained ground versus the euro as grim Japanese
data intensified global recession fears and encouraged buying of
safer assets. []
Gold typically trades in the opposite direction to the U.S.
currency, as it is often bought as a hedge against dollar
weakness. However, both are currently benefiting from rising
risk aversion.
Oil prices were steady just above $37 a barrel, pausing
after Friday's 10 percent rally, as investors awaited further
direction from the signing of a U.S. stimulus package later this
week. []
Among other precious metals, silver also took support from
strong investment.
Holdings of the biggest silver ETF, the IShares Silver Trust
<SLV>, were at a record 7,607 tonnes on Friday. Spot silver
<XAG=> edged down to $13.53/13.61 an ounce from $13.62.
Platinum and palladium remain under considerable pressure
from the sluggish outlook for the car industry, a major user of
the metals as a component in catalytic converters.
President Barack Obama has decided to launch a government
task force for restructuring the struggling U.S. auto industry,
a senior administration official said on Sunday. []
Platinum <XPT=> edged up to $1,065/1,070 an ounce from
$1,059.50, while palladium <XPD=> was at $215/220 an ounce from
$214.
London-based ETF Securities said holdings of its
palladium-backed exchange-traded commodity rose 30 percent last
week as a recovery in platinum and palladium prices cheered
investors. []
(Reporting by Jan Harvey; Editing by Peter Blackburn)
