Gold holds near $1,710 on global growth concerns

* Drop in stocks, commodities exerts some pressure

* Financial markets brace for impact of Hurricane Sandy (Changes trade comment, byline, updates prices)

By David Brough

LONDON, Oct 29 (Reuters) – Gold prices held near $1,710 an ounce on Monday as concerns over the global growth outlook supported demand for the metal as a store of value, but losses in the broader financial markets kept a lid on gains.

The metal’s resilience above $1,700 an ounce, a level it repeatedly tested last week, has reassured buyers who had feared a deeper correction after it fell to a more than six-week low at$1,698.39 on Oct. 24, analysts said.

But the metal struggled for traction on Monday as global stock and commodity prices fell, with a recent run of downbeat corporate earnings casting a shadow over the growth outlook and investors bracing for the impact of a giant U.S. hurricane.

U.S. stock markets will be closed on Monday and possibly Tuesday, the operator of the New York Stock Exchange said, as the East Coast braces for Hurricane Sandy. That could thin gold trade.

Spot gold was down 0.1 percent at $1,709.30 an ounce at 1157 GMT, while U.S. gold futures for December delivery were down $1.90 an ounce at $1,709.90.

“Gold is holding up well due to a higher risk perception, because gold is often perceived as a safe haven,” said Eugen Weinberg, global head of commodities research at Germany’s Commerzbank in Frankfurt, noting key support at $1,700.

“People are more negative on the economy and so are looking for somewhere to park funds.”

Spot gold is heading for its biggest monthly loss since May this month, having hit an 11-month peak above $1,795 an ounce on Oct. 5 after the Federal Reserve unveiled its latest stimulus programme of purchasing mortgage-backed debt.

Analysts and traders said they expected gold to trade in a narrow range due to uncertainty ahead of non-farm payrolls data later in the week. The Fed has explicitly tied the extent of its new easing programme to the jobs market.

UNCERTAIN TIMES

Hedge funds and money managers cut their bullish bets in gold and silver futures in the week to Oct. 23 amid fresh concerns over the future of the U.S. Federal Reserve’s monetary stimulus.

Further out, investors are also awaiting the U.S. elections and the so-called “fiscal cliff”, a series of automatic spending cuts and tax increases that will kick in if Congress fails to reach a deficit-reduction deal by the end of the year.

“We are unlikely to see any significant moves in gold until we are closer to knowing what will happen with the U.S. fiscal cliff,” said Nic Brown, head of commodities research at Natixis.

On the physical side of the markets, gold importers in India, the world’s biggest buyer, are retreating after picking up bargains last week as prices recovered from a more than two-month low due to the falling rupee.

The weakening rupee was seen as dampening Indian gold physical demand in the run-up to the festival season, which will peak with Diwali and Dhanteras next month.

The rupee, which fell past the keenly watched 54 rupees per dollar mark on Monday, plays an important role in determining the landed cost of dollar-quoted gold.

From a technical perspective, analysts who study past price patterns for clues on the next direction of trade flag up support at $1,703 an ounce.

Silver was down 0.8 percent at $31.75 an ounce, while spot platinum was down 2.1 percent at $1,537.75 an ounce and palladium was down 1.4 percent to $590.47 an ounce. (Editing by Jane Baird)

Source: Reuters