Gold weakened on Tuesday as a firmer tone to the equity markets reduced the precious metal's appeal as a haven, with the steady supply of scrap gold entering the market also keeping a lid on gains. However, fresh flows into exchange-traded funds showed investors' appetite for bullion remained sharp and prevented further falls. Spot gold eased to $920.55/$921.55 an ounce at 1104 GMT from $922.55 late in New York on Monday. "A lot of upward pressure to the market was driven by risk aversion," said BNP Paribas analyst Michael Widmer. "There has been a bit of a rebound in the equity markets, and financial stocks are performing a bit better in the United States," he said. "That has taken some upward pressure off prices." Equities climbed to a one-month high in Asia as banks rose on hopes the financial system may be stabilising. Although they have eased a touch in Europe, U.S. stock futures are pointing to a positive open on Wall Street. [.N] Prices are also being pressured by a flood of scrap jewellery returning to the market, as economic weakness, near-record bullion prices and currency devaluation in key jewellery markets prompt selling. "Traders report an increasing supply of scrap gold in India, the world's largest gold consumer," Commerzbank said in a note. The market is looking ahead to a two-day U.S. Federal Reserve meeting due to begin later on Tuesday. The Fed is expected to save its ammunition amid tentative signs of stability returning to the financial sector. [TOPWRAP] Fears over economic and financial instability have boosted inflows into gold and bullion-backed exchange-traded funds since the beginning of the year. Latest data suggests that trend is picking up again after running out of steam last week. RECORD New York's SPDR Gold Trust said its holdings hit a record 1,069.05 tonnes on Monday, while in Europe, holdings of Julius Baer's gold-backed ETF rose 20 percent in the week to March 17, also to a record. [GOL/SPDR] [ID:nLH510877] "The (SPDR) fund is buying gold at the expense of the jewellery market, which is seeing reduced buying activity," said Fairfax analyst John Meyer. Gold demand in the world's biggest jewellery market, India, remained week, as traders anticipated lower prices, dealers said. "Local demand is very bad," one trader told Reuters. [ID:nBOM503678] The decline in jewellery buying, which typically accounts for two-thirds of global demand, is also tempering gold prices, analysts said. Among other precious metals, spot silver was little changed at $12.88/12.95 an ounce from $12.89. Platinum edged down to $1,047/1,055 an ounce from $1,055, while palladium slipped to $197.50/201.50 an ounce from $201. Both metals are, unlike gold, primarily industrial in use and have suffered from a slowdown in economic activity.

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