By Arpan Mukherjee Of DOW JONES NEWSWIRES WELLINGTON (Dow Jones)--Spot gold was trading lower in Asia amid selective profit-taking after prices rose more than 3% late Friday, but steady physical demand is providing a strong floor for now, traders said Monday. At 0516 GMT, spot was at $1,819.60 a troy ounce, down $9.50 from its previous close after slipping briefly below the $1,800/oz level to an intra-day low of $1,799.70/oz. A recovering stock market is weighing on sentiment as some investors liquidate part of their gold investments to move the cash back into riskier assets such as shares and unit trusts. Asian stock markets were generally higher after Wall Street rose Friday following Federal Reserve Chairman Ben Bernanke's assurances that the Fed will continue to pursue an accommodative policy. Bernanke noted he was ready to provide more support to the U.S. economy and said the Fed would extend its September meeting to discuss possible options. But analysts said the near-to-long-term view on gold remains largely positive. "We've seen gold punching down, but it's just temporary," said a Singapore-based trader, adding that he had received buy orders for gold and silver from Singaporean clients. Traders said there has been strong physical demand in places like Singapore where investors continue to remain concerned about inflationary pressures in the economy. Singapore's consumer price index rose 5.4% in July, registering a bigger jump than a median estimate of 5.0%. Despite the correction in gold prices, which fell by about 11% to $1,703.10/oz last week from a record $1,912.29/oz on August 23, traders and analysts remain convinced about the yellow metal's bullish outlook. Persistent euro-zone debt worries and weak global growth have pushed gold into record territory as nervous investors exited riskier assets and bought gold. But the rise from now on may not be as dramatic as seen earlier this month, they said. Morgan Stanley said in a note that it believed gold continues to be an "insurance policy against a rising probability of worsening global systemic risks." The recent price decline provides a buying opportunity, it said. The flurry of U.S. economic data later this week such as consumer spending, factory orders, the Institute of Supply Management's purchasing manager's index and employment report, are also likely to keep gold well-supported. "Gold will be very well supported since ..it is much more likely to see weakness in the U.S. economy," said IG Markets strategist Ben Potter. Any further sign of a weakening economy is likely to push investors towards gold for its safe-haven appeal. On the other hand, if the data come in strong, it could boost investor confidence and put downward pressure on gold, he said. Traders said silver is likely to move in tandem with gold. Silver gained last week when gold surged past the $1,900/oz mark. At 0516 GMT, silver was at $41.20/oz, down 30 cents, palladium was at $753/oz, down $3, while platinum was at $1,837/oz, up $8 from its previous close. -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

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