UPDATE 2-Gold falls 2 percent as shares surge on rate cuts

 * Gold drops 2 percent, off 1-week high

 * Nikkei up as high as 2 percent before losing gains

 * Oil falls more $1 on concerns about demand
 (Updates prices)

 By Lewa Pardomuan

 SINGAPORE, Oct 9 (Reuters) - Gold slipped more than 2
percent on Thursday after coordinated rate cuts by major
central banks ignited a rally in stock markets and encouraged
some speculators to shift their money back to equities.

 Asian stocks rallied and the yen slipped after central
banks from China to Europe and the United States cut interest
rates to support the global economy, though investors remained
fearful with credit markets still nearly frozen. [MKTS/GLOB]

 Gold <XAU=> traded at $881.15 an ounce, down $25.35 an
ounce from New York's notional close on Wednesday, with weak
oil prices also adding to the selling pressure.

 "Gold is facing some pressure today which is related to a
recovery in equities markets in Asia. I think the range will be
wide for the time being at $850 to $920," said Dick Poon,
manager of precious metals at Heraeus Ltd in Hong Kong.

 But a jump in holdings in SPDR Gold Trust GLD to a new
record reflected investor's growing interest in bullion as a
safe-haven asset as fears of a global recession persited. Gold
has gained as much as 10 percent this week.

 "Investors and the general public want to buy gold. $925 is
a very important target. If that level is exceeded, there will
be stop loss buying to $950," said Kazuhiko Saito of Interest
Capital Management in Tokyo.

 Gold, which hovered around $925 and $950 in July, was still
well below a record high of $1,030.80 hit in March, when
investors rushed to buy the metal on a falling U.S. dollar and
deepening financial troubles in the United States.

 Holdings in the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust GLD, hit anotherrecord at 763.90
tonnes on Wednesday, up from 745.22 tonnes, as uncertainties in
global economy spurred buying from investors,

 For details on SPDR holdings, click on:
 here

 The International Monetary Fund issued its bleakest
forecast in years, saying the world economy was set for a major
downturn with the United States and Europe either in or on the
brink of recession. [ID:nN08530074]

 Gold would benefit from safe-haven buying as intervention
by central banks around the world failed to calm the nerves of
investors, said Darren Heathcote of Investec Australia in
Sydney.

 "I think we sort of looking at the cap around $920. But I
suspect we'll probably look to test that again before long," he
said.

 In other markets, oil slid below $88 a barrel on demand
worries. [O/R]. The yen edged off a three-year peak against the
euro after the coordinated global interest rate cuts helped
improve investor appetite for risk. [USD/]

 Platinum <XPT=> traded at $983.00 an ounce, down $7.50 from
New York's notional close, having hit an intraday high of
$1,005 Despite recent gains, fundamentals were poor due to
dismal car sales, which threatened to cut demand for
autocatalysts.

 U.S. auto sales will fall further in 2009 from this year's
depressed levels as the escalating credit crisis hurts consumer
confidence, according to auto industry research firm Global
Insight. [ID:nN08520262]

 New York gold futures GCZ8 fell $12.4 an ounce to $894.1
an ounce on the COMEX division of the New York Mercantile
Exchange.
 Precious metals prices at 0647 GMT
 Metal             Last    Change  Pct chg  YTD pct chg
Turnover
 Spot Gold         881.15  -25.35   -2.80      5.82
 Spot Silver        11.48   -0.22   -1.88    -22.27
 Spot Platinum     983.00   -7.50   -0.76    -35.33
 Spot Palladium    194.50    2.00   +1.04    -47.15
 TOCOM Gold       2843.00  -60.00   -2.07     -7.09       
40076
 TOCOM Platinum   3186.00  -44.00   -1.36    -40.33       
13760
 TOCOM Silver      371.70   -3.70   -0.99    -31.29         
597
 TOCOM Palladium   646.00   -6.00   -0.92    -52.18         
294
 Euro/Dollar       1.3689
 Dollar/Yen        100.68
 TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
 (Editing by Michael Urquhart)