* Equities soar on hopes economic slowdown is nearing bottom
* Markets await fresh direction from G20, ECB decision
(Updates throughout, changes dateline - pvs TOKYO)
By Jan Harvey
LONDON, April 2 (Reuters) - Gold dipped on Thursday as a
recovery in equities diverted interest from the precious metal,
with traders awaiting fresh direction from the G20 leaders'
summit in London.
The European Central Bank's interest rates decision later in
the session is also likely to impact prices, traders said.
Spot gold <XAU=> slid to $918.80/920.80 an ounce at 0906 GMT
from $926.40 late in New York on Wednesday.
World leaders are set to declare an end to unfettered
capitalism at the G20 summit, according to the terms of a draft
communique seen by Reuters. []
"The crucial question will be whether markets are satisfied
with what the leaders of the G20 decide on stimulating the
economy," said Peter Fertig, a consultant at Quantitative
Commodity Research in Germany.
"The impact on the U.S. dollar will be the most crucial
question having an impact on gold. The link between gold and the
dollar has got closer again in the last couple of weeks."
Gold is typically bought as an alternative investment to the
dollar, and tends to move in the opposite direction to it.
The G20's influence over the wider markets would also affect
bullion prices, added Fertig.
"If (investors) get the impression that the worst is over,
that stock markets are going to stabilise further -- as they are
rallying this morning -- that would be a negative factor for
gold," he said.
European stocks rose sharply on Thursday on hopes that the
global economic downturn is bottoming out, while MSCI's
all-country world stock index rose 1.9 percent. []
As more investment flows into the equity markets, less will
be spent on other assets such as gold. A recovery in risk
appetite suggested by an uptick in share prices also knocked the
dollar lower against a basket of major currencies. []
Traders are eyeing the ECB's interest rates decision and
accompanying statement later in the session, with a Reuters poll
of analysts showing most saw the bank cutting rates by 50 basis
points to 1.00 percent.
QUANTITATIVE
"We expect a 50 basis point cut in its official target
interest rate, but don't expect the bank to resort to
quantitative easing," said Standard Bank analyst Walter de Wet
in a note. Quantitative easing is widely described as printing
money to boost the financial system.
"Should Mr Trichet confirm that indeed the ECB will not be
easing quantitatively, the euro might gain ground against the
dollar," he said.
The markets are also awaiting key U.S. non-farm payrolls
data on Friday for fresh impetus, traders said.
Among other precious metals, platinum was steady, showing
little reaction to a smaller-than-expected 37 percent drop in
U.S. auto sales in March. []
The metal, which is primarily used as a component in
catalytic converters, shed nearly two-thirds of its value last
year after hitting a record high in March, as the global
slowdown battered the car industry.
"(Platinum) will probably track industrial metals and
volatility on the currency markets for the rest of the week,"
said Andrey Kryuchenkov, an analyst at VTB Capital, in a note.
"Today's G20 debates and the U.S. non-farm payrolls report
on Friday could add a little more volatility," he said.
Spot platinum <XPT=> ticked up to $1,136/1,146 an ounce from
$1,133.50, while spot palladium <XPD=> was steady at $218/221 an
ounce from $218.
Spot silver <XAG=> eased to $12.95/13.02 an ounce from
$13.01, taking its cues from gold.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
