* European stocks rise as rate cuts calm investors
* South African gold output slips 23.2 pct in August
* Platinum up as markets settle but rise seen as short term
(Recasts, updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 9 (Reuters) - Gold slipped on Thursday as
investors cashed in gains that took the metal to a nine-day high
in the previous session, with a recovery in equity markets
attracting investment back to stocks.
Platinum climbed, however, mirroring a recovery in many
industrial metals, as a steadier outlook for the financial
sector relieved downward pressure on the metal.
Spot gold <XAU=> was quoted at $887.60/890.10 at 1329 GMT,
down from $906.50 in late New York trade on Wednesday. Earlier
it touched a session low of $877.65.
"There are still a lot of speculative positions in the
market and some banks are taking profit to make up losses on
other markets," Commerzbank senior trader Michael Kempinski
said.
An uptick in equities is pressuring gold. European stocks
were higher at midday, breaking a three-session losing streak,
after fresh government and central bank action to combat the
financial crisis. []
U.S. stock index futures also rose as stronger-than-expected
financial results from IBM <IBM.N> cheered the market.
[]
A group of major central banks including the Federal Reserve
and European Central Bank cut interest rates by 50 basis points
on Wednesday, with South Korea, Hong Kong and Taiwan making cuts
of their own early on Thursday.
Investors have been pulling cash out of stocks and shares in
favour of so-called safer assets like bullion in recent weeks as
the financial crisis has unfolded. A reversal of that trend is
likely to lead to a correction in gold prices, analysts say.
The main external drivers of gold -- the dollar and crude
oil -- were largely steady. Oil prices stabilised just below $90
a barrel after several days of losses. []
The dollar slipped a touch against the euro, but rose
against the yen. []
With financial market turmoil driving the gold market at
present, these influences are taking a back seat, traders said.
"Gold is trading pretty independently at the moment, which
it hasn't done for a long time," said Deutsche Bank trader
Michael Blumenroth.
FUNDAMENTALS SUPPORT
Aside from its value as a financial instrument, gold is also
supported by firm fundamentals.
South African gold output fell 23.2 percent year-on-year in
August, Statistics South Africa said in a report. The republic
has been plagued by power problems since the near-collapse of
its electricity grid in January. []
South Africa is the world's second largest gold producer
after China.
Strong buying of physical gold by institutional and smaller
investors is still likely to support bullion, with some European
countries seeing unusually high demand for investment produsts
such as coins and bars.
"There is very big demand from private customers, especially
in Germany and Luxembourg... for coins and bars," said
Kempinski. "There is a lot of safe-haven buying. Everyone is
looking for delivery of physical gold."
Buying of gold exchange-traded funds -- which issue
securities backed by physical gold -- has been particularly
strong. The world's largest bullion-backed ETF, SPDR Gold Trust,
said its holdings rose to a record high on Wednesday.
Spot silver <XAG=> was trading at $11.63/11.70 an ounce
against $11.70 an ounce in late New York trade on Wednesday.
Among other precious metals, platinum <XPT=> rose to
$1,017.50/1,041.50 an ounce from $990.50, while palladium <XPD=>
edged up to $198/208 from $192.50.
"The platinum group metals are up around 2 percent and are
definitely trading more as industrial metals than as investor
metals," said JP Morgan analyst Michael Jansen in a note.
(Reporting by Jan Harvey; editing by Michael Roddy)
