Gold gets boost from safe-haven bids as equities slide

By A. Ananthalakshmi SINGAPORE (Reuters) - Gold added to overnight gains on Thursday, buoyed along with other safe-haven assets, as weak global manufacturing data and the first diagnosis of Ebola in the United States unnerved equities. Gold, often seen as an alternative investment during times of uncertainty, had edged up 0.6 percent to $1,220.55 an ounce by 0344 GMT. The metal gained 0.4 percent on Wednesday after earlier falling towards a nine-month low. Asian stocks dipped following Wall Street's losses, sending investors scurrying to the safety of U.S. bonds, the Japanese yen and gold. U.S. stocks dropped more than 1 percent on Wednesday as the Ebola health scare pressured shares of airlines and transportation companies. [MKTS/GLOB] "With the likelihood of further weakness in equity markets, coupled with the still volatile situation in Hong Kong, we would rather not want to be short gold here, as we think the precious metal may benefit from some short-covering heading into the weekend," INTL FCStone analyst Edward Meir said. Investors were eyeing unrest in Hong Kong, where tens of thousands of mostly young people have continued protests for nearly a week, demanding China introduce full democracy so the city can freely choose its own leader. Gold could gain more if the situation gets tense or stock markets take a further hit as businesses get affected. Some banks and other financial firms have already begun moving staff to back-up premises on the outskirts of Hong Kong to prevent growing unrest from disrupting trading and other critical functions. The recent gains pushed gold further away from $1,200 - a key psychological level that would have triggered a severe sell-off. Gold, however, is not completely out of the woods. The strength in the U.S. dollar has weighed heavily on it and other precious metals in recent weeks. Though the dollar rally paused Thursday, it was not too far from a four-year peak against a basket of major currencies. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a good measure of investor sentiment, said its holdings fell 1.20 tonnes to 768.66 tonnes on Wednesday - the lowest since December 2008. Investors were also eyeing the outcome of a policy meeting Thursday by the European Central Bank, which is expected to present details of a new asset-buying plan that it hopes will revive the flagging euro zone economy and see off the spectre of deflation. PRICES AT 0344 GMT Metal Last Change Pct chg Spot gold 1220.55 7.16 0.59 Spot silver 17.26 0.12 0.7 Spot platinum 1287.75 13.45 1.06 Spot palladium 783.75 9.85 1.27 Comex gold 1221.4 5.9 0.49 Comex silver 17.305 0.046 0.27 Euro 1.2662 DXY 85.57 COMEX gold and silver contracts show the most active months