By Lewa Pardomuan SINGAPORE (Reuters) - Gold dropped slightly on Thursday to track a weaker euro, but strong investment demand was likely to support prices, with ETF holdings hitting another record as fears about a worsening global recession lingered. The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said it held arecord 805.96 tonnes of gold as of January 21, up 3.06 tonnes from802.90 tonnes on January 20. Gold was trading at $852.15 an ounce, down $1.90 from New York's notional close on Wednesday, but was within sight of a two-week high of $865.80 hit on Tuesday. ETF holdings have gone up around 4 percent in the past month on a combination of worries over economic growth and the falling interest rate environment, but dealers said bullion may lack strength to revisit $900, a level last seen in October. "We are not building a trend here, we've just got a reaction to a difficult situation. I can't really say that gold is leading a commodities spike higher," said Darren Heathcote of Investec Australia in Sydney. "It just happens to be benefiting from a reaction to a very difficult market elsewhere. We can't say we're going to break $900 and stay there, but it's possible that we'll break it. From one day to the next, the market is very, very fickle." Gold rallied to a two-month high of $931 in early October but then dropped to a 13-month low around $680 in the same month after declines in stock markets forced investors to cash in to cover losses. Trading was also choppy in January, with prices falling to a one-month low around $801 last week, before bargain hunting pushed up prices. Bullion was below a record high of $1,030.80 hit last March. The euro slipped to $1.3020 amid anxiety about global banking woes, with the pounds also resuming falls against the dollar towards 23-year lows after a government rescue package for struggling British banks failed to reassure investors. In Asia, China's economic growth slumped to 6.8 percent last quarter, dragging down the pace of expansion for all of 2008 to a seven-year low of 9.0 percent as the full forMce of the global financial crisis struck home. "Given the current performance of the stock markets, I think investors shift some of their money to precious metals. Funds have driven up prices but it's not necessarily the fundamentals," said a dealer in Hong Kong. "Gold may try the highs but if it fails to sustain the gains, then we will see a very sharp reversal," he said. Asia shares edged up, with investors reassured after bank shares fuelled a Wall Street rally, but with global economic gloom still pervasive, safe-haven trades such as the yen and U.S. Treasuries also rose. The MSCI index of Asia-Pacific stocks outside Japan was up more than 1 percent, while Japan's Nikkei average hit a two-month low before bouncing. Oil was steady around $43 a barrel. Platinum was trading at $929.50 an ounce, up $6.00 from New York's notional close. New York gold futures added $2.4 an ounce to $852.6 in electronic trade. | 
