* Stock market losses drag gold well off its highs
* Japan's crisis raises concerns over global growth
* Platinum recovers but investors worry over Japan demand
* Coming up: U.S. initial jobless claims Thursday
(Rewrites, adds comments, graphics, updates prices, changes
dateline, previously NEW YORK/LONDON)
By Frank Tang
NEW YORK, March 16 (Reuters) - Gold rose on Wednesday but
the metal struggled to extend gains following the previous
day's sharp decline, as panic selling in the equity markets
prompted investors to sell bullion to cover losses.
Bullion ended well off its session highs as Wall Street
briefly wiped out gains for 2011, as a quake-crippled Japan
raised concerns about slower worldwide growth. U.S. stocks
ended 2 percent lower, as volatility soared on speculation that
damage to nuclear reactors in Japan wasn't contained.
[]
"There is a severe reduction in risk appetite out there. If
we see the nuclear crisis really unfolds in a massive way, that
could very well kill sentiment and a good portion of global
growth, as Japan is the third largest economy in the world,"
said Bart Melek, head of commodities strategy at TD Bank
Financial Group.
Earlier in the session, bullion was underpinned by renewed
euro debt worries after Moody's credit rating agency downgraded
Portugal by two notches late Tuesday.
Spot gold <XAU=> gained 0.2 percent to $1,396.70 an ounce
at 3:49 p.m. EDT (2049 GMT). U.S. gold futures for April
delivery <GCJ1> settled up 0.2 percent to $1,396.10.
Total trade in U.S. bullion futures was just below its
30-day average, preliminary Reuters data showed, after it rose
to the highest level since late January on Tuesday.
On charts, gold bounced off its 50-day and 100-day moving
averages during Tuesday's sell-off, but Barclays Capital
strategists said that bullion's failure to extend gains after
recent rallies suggested prices could fall toward $1,360 an
ounce.
(Graphic: http://link.reuters.com/tev58r)
Year to date, bullion turned negative and was down 1.5
percent after the metal on Tuesday notched its biggest one-day
drop since January. []
Also underpinning gold was surging U.S. producer prices in
February, their fastest pace in 1-1/2 years, a day after the
Federal Reserve said it had a watchful eye on inflation
pressures it expects to subside.
Unrest that swept the Middle East and North Africa earlier
this year, a key factor pushing gold to a record $1,444.40 an
ounce last week, continues to simmer.
The Libyan army closed in on the opposition bastion of
Benghazi on Wednesday, while in Bahrain forces fired tear gas
in a crackdown on protesters. [] []
YEN NEAR RECORD HIGH
Gold trading was choppy as the yen rose nearly 1 percent to
approach its record high against the dollar on mounting
concerns in Japan, with investors nervously watching if
Japanese authorities will soon step in to stem the currency's
rise. []
Other traditional safe havens rose, with the Swiss franc
<CHF=> hitting a record high against the dollar and benchmark
U.S. Treasury yields <US10YT=RR> touching their lowest in three
months after housing data highlighted the fragility of the U.S.
economic recovery. []
Interest in gold exchange-traded funds remained lackluster,
with holdings of the largest, New York's SPDR Gold Trust <GLD>,
edging down by another 0.9 tonnes on Tuesday to a 10-month low,
continuing a trend seen throughout this year. []
Japan's crisis has hit demand for platinum group metals
(PGM), with some of the world's top auto makers forced to halt
production of vehicles that use the metals for autocatalysts.
(Graphic: http://link.reuters.com/pys58r )
Japan is by far the largest single user of platinum. In
2010, it accounted for nearly a fifth of global platinum
autocatalyst demand, and 15 percent of world palladium demand.
(Graphic: http://r.reuters.com/geq58r)
Platinum <XPT=> slipped 0.5 percent to $1,691.74 an ounce,
while palladium <XPD=> dropped 1.6 percent to $692.97. Silver
<XAG=> eased 0.3 percent to $34.17 an ounce.
Prices at 3:48 p.m. EST (1948 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1396.10 3.30 0.2% -1.8%
US silver <SIK1> 34.472 0.355 0.0% 11.4%
US platinum <PLJ1> 1700.50 -5.10 -0.3% -4.4%
US palladium <PAM1> 705.05 0.15 0.0% -12.2%
Gold <XAU=> 1396.70 2.75 0.2% -1.6%
Silver <XAG=> 34.17 -0.12 -0.3% 10.7%
Platinum <XPT=> 1691.74 -8.26 -0.5% -4.3%
Palladium <XPD=> 692.97 -11.53 -1.6% -13.3%
Gold Fix <XAUFIX=> 1402.00 3.50 0.3% -0.6%
Silver Fix <XAGFIX=> 34.73 85.00 2.5% 13.4%
Platinum Fix <XPTFIX=> 1726.00 30.00 1.8% -0.3%
Palladium Fix <XPDFIX=> 719.00 8.00 1.1% -9.1%
(Additional reporting by Jan Harvey in London;editing by
Sofina Mirza-Reid)
