LONDON, Feb 23: Gold fell almost 2 per cent on Monday, tracking back from one-year highs as concerns over the global economy eased and equities rebounded from multi-year lows.

Spot gold was trading at $985.60/987.20 an ounce versus $997.30 in New York late on Friday.

It hit $1,005.40 an ounce on Friday, just 2.5 per cent below a record $1,030.80 an ounce it reached in March last year.

De Wet said gold should find support above $970. “Our average is $915 for the year -- we are bullish for gold.

Citigroup Inc is in talks that could see the US government take a bigger stake, a source said, sparking a recovery in the battered share price of what was once the country’s most valuable bank.

Investor appetite for gold has increased sharply as financial markets have fallen and fears over long-term inflation have risen due to a massive US economic stimulus package that was signed last week. Gold is perceived as a safe-haven asset.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said holdings were 1,028.98 tons as of Feb. 22, level with the record high of late last week.

Futures for April delivery on the COMEX division of the New York Mercantile Exchange was down 1.5 per cent at $987 an ounce.

On Friday they reached a high of $1,007.70, their highest since March 2008.

We would caution that with Comex investors holding large net long positions this view is not without its risks, John Reade, commodity strategist at UBS, said.

We continue to be wary of a bear-market rally in equities -- profit taking could see gold correct, yet predicting the timing of a sentiment change is impossible, so we merely highlight the risks that large, long gold positions on Comex pose to investors.

World Gold Council data last week showed that in 2008 jewellery demand fell 11 per cent in tonnage terms while industrial demand also fell 7 per cent on reduced spending on items such as laptops and mobile phones. —Reuters