* Gold rises more than 7 percent, rallying above $800
* Physical buying supports gold, but investors cautious
* Economic uncertainties bolster gold’s haven status (Recasts, new details throughout, moves dateline from LONDON)
By Frank Tang
NEW YORK, Nov 21 (Reuters) - Gold rallied above $800 an ounce on Friday, ending the week 8 percent higher, as mounting economic uncertainties and strong physical bullion demand triggered a bout of heavy buying.
Investor confidence was shaken after shares of Citigroup, the second-largest U.S. bank by assets, tumbled for a fifth straight day, as the company looked at options, including a sale of parts of the company or a merger.
U.S. stocks were up 4 percent in Friday’s late trade, a day after Wall Street slid to 11-year lows and blue-chip Dow Jones industrial average lost nearly 500 points. [.N]
“Gold is really starting to re-emerge as the safe-haven asset,” said David Meger, a metals analyst at Alaron Trading.
“The fact that gold is holding up well in the midst of the commodity decline shows some nice physical support. We have noticed very significant physical demand every time the market would test the lower $700 levels,” Meger said.
Spot gold XAU= rose to $800.70 an ounce, its highest since Oct 21. It ended at $798.75 at 2:30 p.m. EST (1930 GMT), up 7.2 percent from Thursday’s close.
U.S. gold futures for December delivery GCZ8 settled up $43.10, or 5.8 percent, at $791.80 an ounce on the COMEX division of the New York Mercantile Exchange.
“Gold prices managed to rally, even though global equities fell ... It is possible that gold is benefiting from safe-haven buying, which could be offsetting the impact of rising deflationary pressures,” said James Steel, chief commodity analyst at HSBC.
Meanwhile, a widely followed industry report showed physical buying continued to boost gold.
Global demand for gold jumped 18 percent year-over-year to 1,133.4 tonnes in the third quarter, reversing a weaker trend earlier this year as investors hoarded gold bullion coins and bars and jewelry buying rose, the World Gold Council said on Wednesday. [ID:nN19328642]
“We have not seen a huge change in fundamentals. The World Gold Council report certainly supports from a demand perspective. We think on the back of strong jewelry demand the downside should be cushioned for gold prices,” said Suki Copper, an analyst at Barclays Capital.
A WGC official said on Friday demand for gold was expected to be steady around 843 tonnes in the fourth quarter on festive demand and buying by investors. [ID:nSP400413]
But gold is still about 25 percent below a lifetime high of $1,030.80 struck in March, which it has been unable to revisit after selling choked off recent rallies. It hit a two-month high of $931 in October, but sharp declines in equities forced investors to cash in to cover losses.
Platinum XPT= fetched $806.00, 5.7 percent higher than Thursday’s late quote, following broad-based strength of all precious metals.
The metal is used mainly as autocatalysts to clean exhaust fumes.
Honda Motor Co (7267.T) said it would build fewer cars in Japan, Europe and North America to reflect an increasingly bleak outlook for sales as the global economic crisis discourages big-ticket purchases. [ID:nT41789]
Silver XAG= was at $9.57, up 6.9 percent from Thursday’s finish, and palladium XPD= fetched $176.50, up 2 percent from its previous close. (Additional reporting by Humeyra Pamuk in London; Editing by Walter Bagley)