* Gold steadies after 1.5 pct gain on Tuesday
* ETF inflows support gold rally
* European and Asia shares fall for second day
(Updates throughout, changes dateline from SINGAPORE)
By Clara Denina
LONDON, Feb 24 Gold prices held ground above
$1,230 an ounce on Wednesday, acting as foil against risk
alongside top-rated government bonds as oil's fall rippled into
global equity markets.
Spot gold rose to $1,232.41 an ounce by 1013 GMT,
after gaining 1.5 percent in the previous session, when prices
benefited from strong inflows into bullion funds.
"It's the financial market turmoil and negative interest
rates ... lifting safe-haven flows into gold," Societe Generale
analyst Robin Bhar said.
Technically, gold looks set to test recent highs at $1,240
and then a one-year top of $1,260, MKS Group said in a note.
Shares fell in Europe and Asia as a nascent recovery in
crude prices lost momentum after Saudi Arabia's oil minister
effectively ruled out production cuts by major producers any
The yen, also considered a safe haven, gained against key
peers such as the dollar and euro.
Gold has gained some 16 percent so far this year as
investors have channelled money into the asset on concerns over
the global economy and financial instability, and the repricing
of expectations for U.S. interest rate rises.
Assets in SPDR Gold Trust, the top gold-backed ETF,
are at their highest since March 2015. The fund's inflows since
the beginning of the year have already surpassed outflows for
the whole of 2015.
Inflows have offset a lack of interest from key Asian
buyers, who have taken advantage of the gold rally to sell
bullion and take profits.
Discounts in India are at a record of about $50 an ounce to
the global benchmark, while in China they are at about $1.
The metal has also been helped by speculation that the
Federal Reserve may not raise U.S. interest rates this year,
after the first rate hike in nearly a decade in December.
Prices for U.S. fed funds futures suggest investors see
little chance of any increases this year.
"The sustainability of gold's rally comes down to the Fed
and the market pricing in only one or no rate increases this
year," Societe Generale's Bhar said.
The Fed may need to keep U.S. interest rates unchanged for
an extended period to give inflation time to rise back to the
central bank's 2 percent target, Dallas Fed chief Robert Kaplan
said on Tuesday.
However, Kansas City Fed President Esther George said the
U.S. central bank should consider raising interest rates at its
next policy meeting in March.
Among other precious metals, silver eased 0.5 percent
to $15.20. Platinum dipped 0.8 percent to $931.70, edging
toward a two-week low of $913.50 reached earlier this week.
Palladium fell 0.7 percent to $495.30.
(Additional reporting by A.Ananthalakshmi in Singapore; Editing
by David Holmes)