LONDON, Feb 10: Gold was little changed in Europe on Tuesday as traders took to the sidelines ahead of a major economic stimulus plan due to be announced in the United States.

Prices steadied after slipping more than $15 an ounce on Monday, as safe haven buying of the precious metal by risk-averse investors stopped the fall.

Spot gold was quoted at $895.50/897.50 an ounce against $895.00 an ounce late in New York on Monday.

Traditional monetary theory implies that gold is likely to trade inversely with Treasury yields, HSBC analyst James Steel said in a note.

Higher interest rates raise the opportunity cost of owning gold and reduce bullion’s relative attractiveness in comparison to interest-bearing instruments.

However, the stimulus plan could also raise fears over inflation, which would be positive for bullion, and in the short term could have a positive effect on the metal if it boosts commodities as an asset class.

The world’s largest exchange-traded fund, the SPDR Gold Trust, said its holdings rose to a record 881.87 tons on February 9.

Rising ETF investment has taken up some of the slack caused by weaker jewellery demand in recent weeks. Indian buyers are waiting for a fall in prices before making purchases, dealers said.

Local demand is still poor, said Ranjeeth Rathoid, director at Chennai-based MNC Bullion. India is the world’s leading gold market.

Among other precious metals, platinum broke back above $1,000 an ounce to trade at $1,011/1,019 an ounce, against $988 late in New York on Monday.

South Africa, source of four out of five ounces of the world’s platinum, expects the metal price downturn to worsen, hitting the economy through capital flight and job losses, Minerals and Energy Minister Buyelwa Sonjica said.

Among other precious metals, palladium edged up to $206/211 an ounce from $205, while silver was at $12.83/12.91 an ounce against $12.83.—Reuters