>Gold higher on physical, safe-haven buying

London -Spot gold rose for the second straight day Tuesday on physical demand from Asia and doubts about the nascent recovery in equity markets. The tumble in financial stocks Monday unnerved investors, prompting them to seek cover in safe-haven assets like gold. Further equity losses could drive gold above its near-term resistance at $890 a troy ounce, traders said. At 0956 GMT, spot gold was trading at $888.80/oz, up 0.4% on the day. Spot silver followed gold's lead and was 1.1% higher at $12.18/oz. Spot platinum bounced 0.5% to $1,165.50/oz, while spot palladium was 2% higher at $226.50/oz. The Dow's reversal Monday after six weeks of gains gave fresh life to worries that the banking industry remains vulnerable. "It goes to show...you get some bad data and the old fears reassert themselves very quickly," said a precious metals trader in London. Further weakness in equity markets are likely to sustain investor interest in gold and force more shorts to cover, he said. Traders said a break above $890/oz could lead to a test of $900/oz. If gold closed above that level, it would break its recent downtrend and possibly generate enough momentum to rally to $940/oz, said James Moore, an analyst at TheBullionDesk.com. European equity markets were higher Tuesday, which could damp some of that safe-haven demand. Should equity markets retain those gains, gold may retrace but hold above last week's lows, traders said. Physical demand from India remains steady since its reappearing recently after being absent in the first few months of 2009. Demand from East Asia is also healthy, and this stronger bid should continue to provide a near-term bottom at $865/oz, which may keep investors interested, said Narayan Gopalakrishnan, a trader at Swiss bullion house MKS Finance. "As long as we hold $865/oz, we can still see minor interest coming in," Gopalakrishnan said.

Source: COMMODITIESCONTROL