* Markets await U.S. stimulus, bank rescue plans
* SPDR Gold ETF hits fresh record
(Updates throughout, changes dateline, pvs TOKYO)
By Jan Harvey
LONDON, Feb 10 (Reuters) - Gold was little changed in Europe
on Tuesday as traders took to the sidelines ahead of a major
economic stimulus plan due to be announced in the United States.
Prices steadied after slipping more than $15 an ounce on
Monday, as safe haven buying of the precious metal by
risk-averse investors stopped the fall.
Spot gold <XAU=> was quoted at $895.50/897.50 an ounce at
1008 GMT, against $895.00 an ounce late in New York on Monday.
"Everyone is waiting to see whether the fiscal stimulus plan
is passed and what its final shape and colour will be," said
Calyon metals analyst Robin Bhar.
"The Treasury Secretary speaks at the same time, so as well
as announcing the stimulus package there are going to be further
details of the bank rescue plan," he added.
The Obama administration's more than $800 billion stimulus
package is expected to be passed by the Senate later this
session, while U.S. Treasury Secretary Timothy Geithner is due
to unveil a plan to rescue stricken banks at 1600 GMT.
[]
Analysts say the passing of the stimulus plan could result
in an increased supply of debt via U.S. government bonds, which
could cap gold prices.
U.S. Treasury debt yields have risen as the market has
braced itself for an increase in supply of bonds. []
"Traditional monetary theory implies that gold is likely to
trade inversely with Treasury yields," HSBC analyst James Steel
said in a note.
"Higher interest rates raise the opportunity cost of owning
gold and reduce bullion's relative attractiveness in comparison
to interest-bearing instruments."
However, the stimulus plan could also raise fears over
inflation, which would be positive for bullion, and in the short
term could have a positive effect on the metal if it boosts
commodities as an asset class.
Oil prices were also steady on Tuesday, holding around $40 a
barrel, ahead of the plan. []
The euro fell versus the dollar after a newspaper quoted the
president of the Russian Association of Regional Banks as saying
the group had submitted a proposal to the Russian government to
postpone loan repayments of up to $400 billion. []
However, it pared losses after Russia denied the report.
A stronger dollar against the euro typically weighs on gold,
which is often bought as a hedge against weakness in the U.S.
currency. However, the two assets have recently shrugged off
their usual negative correlation.
Investment demand for gold is supporting the precious metal.
The world's largest exchange-traded fund, the SPDR Gold Trust
<GLD>, said its holdings rose to a record 881.87 tonnes on
February 9. []
Rising ETF investment has taken up some of the slack caused
by weaker jewellery demand in recent weeks. Indian buyers are
waiting for a fall in prices before making purchases, dealers
said. []
"Local demand is still poor," said Ranjeeth Rathoid,
director at Chennai-based MNC Bullion. India is the world's
leading gold market.
Among other precious metals, platinum <XPT=> broke back
above $1,000 an ounce to trade at $1,011/1,019 an ounce, against
$988 late in New York on Monday.
South Africa, source of four out of five ounces of the
world's platinum, expects the metal price downturn to worsen,
hitting the economy through capital flight and job losses,
Minerals and Energy Minister Buyelwa Sonjica said.
[]
"The industry is suffering but more so the smaller players,"
Sonjica said. "We are seeing smaller mines closed down, bigger
ones reducing their capital injection and in the process
much-needed jobs being lost."
Meanwhile slow demand from automakers hit premiums for
platinum in Asia as dealers struggled to sell inventories, while
Chinese jewellery demand fizzled out after the Lunar New Year,
industry sources said on Tuesday. []
Among other precious metals, palladium <XPD=> edged up to
$206/211 an ounce from $205, while silver <XAG=> was at
$12.83/12.91 an ounce against $12.83.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
