* Wall Street tumble prompts investment inflow into gold
* India, Turkey physical gold import drops
* Hedge fund manager Paulson buys gold ETF, gold stocks.
(Recasts, updates prices, market activity; adds second byline,
dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Sept 1 (Reuters) - Gold futures ended
higher on Tuesday as tumbling Wall Street stocks chased
investors into bullion despite news of lackluster physical
demand.
Volume in precious metals market remained thin because of
slower summer trading, and analysts said bullion investors
should not read too much into Tuesday's action.
Gold had been rising along with the stock market prior to
Tuesday, as signs of economic optimism bolstered the inflation
hedge appeal of gold, traditionally used as a safe haven in
times of financial or geopolitical uncertainties.
"The stock market's weakness seemed to help gold, but we
will still be in a trading range from $925 to $960 an ounce in
the near term," said Leonard Kaplan, president of
Illinois-based Prospector Asset Management.
U.S. December gold futures <GCZ9> settled up $3 at $956.50
an ounce on the COMEX division of the New York Mercantile
Exchange.
Spot gold <XAU=> was at $955.40 an ounce at 2:51 p.m. EDT
(1851 GMT), against $949.65 an ounce late in New York on
Monday.
Gold rose early when U.S. economic data showed the
manufacturing sector returned to growth in August after a
prolonged slump, while pending home sales raced to a two-year
high in July.
Simon Weeks, head of precious metals at the Bank of Nova
Scotia, said the news was mixed for the gold market.
"On the one hand, it is weaker as people unwind safe-haven
positions and put risk on again, and on the other, it is high
due to increased concerns over inflationary pressure," he
said.
But Wall Street stocks slid as uncertainty over the health
of financial companies prompted a sell-off. The S&P 500 index
was down 2 percent.
IMPORTS FALL
Gold's price rose despite signs of weaker physical demand.
India's gold imports fell to 12 to 14 tonnes in August from 98
tonnes a year before as high prices and weak monsoon rains
dented demand, the head of the Bombay Bullion Association said.
[]
Gold imports to Turkey, one of the top three consumers of
the metal, also fell 74 percent year-on-year to 12.517 tonnes,
as demand in the local market weakened. []
But strong demand from hedge funds continued to provide
underlying support. Billionaire hedge fund manager John
Paulson's combined gold and gold-related investments make up
more than 46 percent of his firm's holdings.
They include SPDR Gold Trust, which invests in physical
gold bullion, and which had become his top holding at 30
percent of his portfolio in the first quarter. []
Among other precious metals, silver <XAG=> was at $14.99 an
ounce against $14.89, while platinum <XPT=> was at $1,225.50 an
ounce against $1,237 and palladium <XPD=> was at $286 against
$288.50.
U.S. July auto sales showed that General Motors Co's.
[] August sales fell 20 percent from a year earlier but
sales of its core brands (GMC, Chevrolet, Buick and Cadillac)
rose 21 percent from July.
On the annualized basis tracked by investors, industry-wide
U.S. sales appeared to have topped 14 million units in August,
the highest sales rate of the year so far.
Platinum group metals are mainly used as catalytic
converter to clean toxic exhaust fumes from vehicles.
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 956.50 3.00 0.3 884.30 8.2
US silver <SIZ9> 15.060 0.137 0.9 11.295 33.3
US platinum <PLV9> 1226.80 -17.20 -1.4 941.50 30.3
US palladium <PAZ9> 289.45 -4.05 -1.4 188.70 53.4
Prices at 2:51 p.m. EDT (1851 GMT)
Gold <XAU=> 955.35 5.70 0.6 878.200 8.8
Silver <XAG=> 14.99 0.10 0.7 11.30 32.7
Platinum <XPT=> 1225.50 -11.50 -0.9 924.50 32.6
Palladium <XPD=> 286.00 -2.50 -0.9 184.50 55.0
Gold Fix <XAUFIX=> 955.00 -0.50 -0.1 836.50 14.2
Silver Fix <XAGFIX=> 14.740 0.200 1.4 14.760 -0.1
Platinum Fix <XPTFIX=> 1234.00 0.00 0.0 1529.00 -19.3
Palladium Fix <XPDFIX=> 289.00 0.00 0.0 365.00 -20.8
(Reporting by Frank Tang and Jan Harvey; Editing by Lisa
Shumaker)
