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PRECIOUS-Gold creeps up on auto woes, ETF holdings hit record

Published 03/30/2009, 02:06 AM
PMC
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* Gold ticks up as auto news batters stocks

* Gold up about 5 pct on quarter

* SPDR hits new high, silver trust holdings stay at record

* Activity subdued due to month-end (Releads, updates prices)

By Chikako Mogi

TOKYO, March 30 (Reuters) - Gold nudged up on Monday after stocks were battered by a U.S. task force rejecting the turnaround plans of big automakers, underscoring scepticism about an economic recovery.

The Obama administration autos task force on Monday rejected overhaul plans of General Motors Corp and Chrysler LLC and warned both could be put through bankruptcy to slash debts.

Tokyo shares steepened their decline and were down nearly 4 percent after the news, against the morning's drop of 1.8 percent.

"How U.S. stocks and bonds will react to the auto news will be key for the gold market, but judging from Nikkei's slide it looks to be a positive for gold," said a dealer at a Japanese trading firm.

Gold was at $925.00 per ounce by 0530 GMT, up 0.3 percent from New York's notional close of $922.10. Gold fell 3 percent last week but has held firmly above $900 thanks to buying related to gold-backed securities.

At current levels, gold is up about 5 percent on the quarter but about 10 percent below an all-time high of $1,030.80 hit a year ago. Bullion has recovered about 5 percent from a six-week low of $882.90 hit on March 18, but is 8 percent off the 11-month high above $1,000 set in February.

Stabilising stock markets and the dollar's rise over the past week after the U.S. government announced measures to clean toxic assets off banks' balance sheets put a cap on gold prices, undermining the yellow metal's appeal as a safe haven.

Still, uncertainties over the sustainability of a stock market rally and the dollar's rise, as well as the global economic outlook, kept investor appetite intact, resulting in record holdings of gold-backed securities.

"The stock market is stabilising and investors are stopping their safe-haven buying of gold," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. At the same time, there was nothing to justify selling of gold because it was unclear how the economy would fare, he said.

It has been six months since the collapse of Lehman Brothers, which aggravated the financial crisis, and the global economy and financial system have yet to show a clear sign of a turnaround, traders said.

"Unless the economy really starts working and stock markets rally, banks start lending and businesses revive, people will not jump out of the gold market," Leung said.

Trading was subdued due to the month-end and as some players turned cautious ahead of U.S. nonfarm payrolls data due later in the week. There were few expectations of the meeting later in the week of the G20 group of the world's biggest economies, traders said.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings rose 2.45 tonnes to a record 1,127.44 tonnes on March 29.

For details on the gold holdings of the ETF listed in New York and co-listed on other exchanges, click on: http://www.exchangetradedgold.com/iframes/usa.php

The dollar fell nearly 1 percent against the yen but firmed against the euro after the single currency posted its biggest one-day fall since early January on Friday.

Later on Monday, data on British consumer credit and mortgage lending for February and euro zone March business climate sentiment will be released. Prices as of 0535 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 925.45 3.35 +0.36 5.15 Spot Silver 13.32 0.05 +0.38 17.67 Spot Platinum 1132.50 9.50 +0.85 21.51 Spot Palladium 215.00 -2.50 -1.15 16.53 TOCOM Gold 2901.00 -59.00 -1.99 12.75 32437 TOCOM Platinum 3571.00 -72.00 -1.98 34.65 10523 TOCOM Silver 411.30 -12.10 -2.86 28.81 294 TOCOM Palladium 678.00 -28.00 -3.97 23.27 693 Euro/Dollar 1.3206 Dollar/Yen 96.96 TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce. (Additional reporting by Risa Maeda; Editing by Ben Tan)

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