Gold steadies, ETF falls from record

TOKYO (Reuters) - Gold hovered near a one-week low on Friday, pressured by firming equities, while dealers took a drop from a record high in the world’s largest gold-backed exchange-traded fund as a sign investor demand may be receding.

Holdings of New York’s SPDR Gold Trust fell 0.7 percent from the record high it had climbed to on April 9, the biggest decline this year.

The holdings fell to 1,119.43 metric tons by April 16, down 8.25 metric tons from the previous day. The trust’s holdings have fallen about 1 percent so far in April, versus a rise of roughly 4 percent in the comparable period last month.

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Comments by European Central Bank President Jean-Claude Trichet on Friday, which currency market participants said held no surprises, nevertheless accelerated a fall in the euro, although gold failed to budge.

The euro hit a one-month low against the dollar, dented by uncertain prospects for the euro zone economy.

Trichet said in Tokyo that banks would be the focus for any unconventional policy response to the financial crisis, and that the ECB needed a strategy to eventually reverse those measures.

Gold fell to a one-week low on Thursday on signs of a slowdown in investment demand on budding optimism that the economy was on the mend.

Sluggish physical buying has also failed to provide much support for prices, analysts said.

“Gold markets are much lower.... as the stock markets are moving higher again,” said Adrian Koh, an analyst at Phillip Futures.

Investment demand had buoyed gold to above $1,000 an ounce in late February, but bullion has since lost more than 12 percent.

Koh said that although he was technically a little bearish about gold in the near term, he believed gold’s long-term prospects remained solid.

“Yes, we are starting to see a bit of a decline (in the SPDR), but it’s still not a very large figure, compared to how much we have gained in gold holdings over the past couple of months,” he said.

Gold was at $874.90 per ounce by 3:02 a.m. EDT, up 0.04 percent from New York’s notional close of $874.55.

It has fallen more than 2 percent since the beginning of this week.

India’s gold buyers continued to trickle in to stock up the yellow metal to meet festive demand, traders said.

Akshaya Tritiya, which falls on April 27, is the second-most auspicious day to buy gold after Dhanteras.

Koji Suzuki, a senior analyst at SBI Futures Co Ltd, said gold was drawing some support from a recovery in demand from parts of Asia, such as China. He added that he expects gold to recover.

“Gold is sinking now because of the outflow of funds and technical profit-taking,” he said.

“I think, though, that gold will resume rising after this period of correction is completed,” he said.

Japan's Nikkei stock average gained 1.7 percent as steelmakers surged after Nippon Steel 5401.T negotiated a smaller-than-expected price cut with Toyota Motor Corp 7203.T, but the benchmark marked its first negative week since early March. .T

Signs that the global economic downturn may be easing have helped boost platinum, which is used in autocatalysts.

The metal, also used in jewelry, has fallen a touch since hitting a 6-1/2-month high of $1,244 per ounce on Monday, but has managed to stay above $1,200.

Spot platinum was at $1,207.5 an ounce, up from its notional close of $1,201.5.

Precious metals prices at 3 a.m. EDT

Metal Last Change Pct chg YTD pct chg Turnover

Spot Gold 874.85 0.30 +0.03 -0.60

Spot Silver 12.18 -0.03 -0.25 7.60

Spot Platinum 1209.50 8.00 +0.67 29.77

Spot Palladium 233.00 2.00 +0.87 26.29

TOCOM Gold 2812.00 -28.00 -0.99 9.29 33564

TOCOM Platinum 3888.00 22.00 +0.57 46.61 15893

TOCOM Silver 389.20 -12.40 -3.09 21.89 609

TOCOM Palladium 757.00 -6.00 -0.79 37.64 271

Euro/Dollar 1.3098

Dollar/Yen 99.57

TOCOM prices in yen per gram, except for TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.

Additional reporting by Chikako Mogi; Editing by Ben Tan