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TOKYO - Gold eased slightly on Thursday after touching a 6-½ month high the previous day, while holdings of leading gold fund SPDR Gold Trust jumped 4.5 percent, underscoring the metal's lure as a safe-haven asset.

Spot gold traded at $935.45 per ounce by 0355 GMT, down 0.3 percent from New York's notional close on Wednesday.

It spiked to a peak of $953.30 per ounce on Wednesday, its highest since July 22. The peak is 7.5 percent below a lifetime high of $1,030.80 struck last March, when record oil and uncertainties in the dollar's outlook spurred buying.

"Gold is now being sought as the best alternative to cash," said Kaname Gokon, deputy general manager at Okato Shoji Co.

"The correction is set to be short-lived as buying from long-term investors is expected on any dips," he said, adding that gold was seen well supported at $920-$930.

The holdings of SPDR, the world's largest gold-backed exchange-traded fund, rose 40.37 tonnes, or 4.5 percent, to a record 935.09 tonnes on Feb. 11.

They have climbed by more than 150 tonnes since the beginning of the year, and traders said long-term investors who usually pay little attention to day-to-day price movements were behind the jump.

Just as demand has increased for long-dated U.S. Treasury debt, investors are shifting their focus to gold and gold-backed securities amid worries over the effectiveness of the latest rescue plan for the U.S. financial industry.

Financial markets were disappointed by a $2 trillion rescue programme for U.S. banks unveiled on Tuesday that was seen as lacking details and clarity, especially over how a public-private partnership would buy up bad assets.

U.S. congressional negotiators reached a deal on Wednesday on $789 billion in emergency spending and tax cuts aimed at pulling the economy out of a deepening recession, and voting on it could take place as early as on Thursday.

The yen rose against other major currencies in safe-haven trades on Thursday, with investors avoiding risk.

The dollar fell 0.4 percent from late U.S. trading on Wednesday to 90.01 yen.

The Nikkei stock average fell 2.3 percent on concerns about the U.S. rescue plan, with Tokyo stocks trading after a national holiday on Wednesday.

SOURCE: http://communities.thomsonreuters.com/BaseMetals/217793?utm_source=20090212&utm_medium=bmemail


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