* Wall St soars in broad rally, banks up on Greek deal
* Dollar rises vs yen, Swiss franc, risk appetite returns
* U.S. consumer spending rebounds, calms recession fears
* Spot gold falls 2.20 pct, COMEX gold eases 0.47 pct
(Updates with closing prices, adds comment, background. Changes byline, dateline from London previously)
By Carole Vaporean
NEW YORK, Aug 29 (Reuters) - Gold prices remained lower into late trade on Monday, as Wall Street stocks added to their gains on increased investor risk tolerance, but bullion cut its decline to about 2.20 percent as some buyers bought dips.
Sought as a haven asset in times of uncertainty, the yellow metal had some players adding to their holdings as a safety play, unconvinced that a day's positive news would stick.
"Although gains in equities initially caused flight-to-quality buyers of gold to disappear, there's still a lot of pent up demand on price breaks. Gold seems to be an asset people want to own for the foreseeable future," said Adam Klopfenstein, Senior Market Strategist at MF Global in Chicago.
Spot gold
Last week, prices were highly volatile sliding more than $200 from a record $1,911.46 an ounce, dropping towards $1,700.
"The sharp sell-off last week was a reminder that markets never move in a straight line, and it will probably slow down, but not stop, further progress to the upside," said Saxo Bank senior manager Ole Hansen.
In New York, COMEX gold for December delivery
U.S. stocks rallied over 2 percent in a broad rally as a merger between two big Greek banks provided a rare bit of encouraging news out of debt-stricken Europe, while a rebound in consumer spending calmed fears of a U.S. recession. [.N]
Insurance company shares were higher after property damage from Hurricane Irene was less than feared, according to early estimates. For details, see [ID:nN1E77S0H6]
Gold's moves were limited in both directions by light volumes, however, with a bank holiday keeping London trade light and New York desks thinly staffed following a hurricane wracked U.S. East Coast.
Dollar strength also pressured gold prices. The greenback climbed against the yen and Swiss franc as strong consumer spending data reduced fears of another U.S. recession. [USD/]
U.S. consumer spending, which accounts for about 70 percent of economic activity, rebounded strongly in July from June. Weak pending sales of existing homes, however, showed the housing sector remains soft. [ID:nN1E77SOBS]
Some participants noted that mixed U.S. economic readings and anticipation of a next Federal Reserve move to stimulate U.S. growth could keep gold rangebound for the near term.
"Markets are waiting for our leaders to come to some type of conclusion that would paint a bullish picture. That's taking center stage right now," MF Global's Klopfenstein said.
Last Friday, Federal Reserve Chairman Ben Bernanke opted to postpone a decision on more stimulus, giving the central bank more time to assess the state of the U.S. economy.
The Fed's move to leave the door open for further measures heightens the focus on upcoming economic data, including the closely watched August U.S. employment report due on Friday.
Gold players will also be anticipating the U.S. central bank's policy-setting meeting in September that was extended to two days to allow time to review all of the Fed's "tools."
Further quantitative easing would likely further undermine the dollar, boosting gold's appeal as a safe store of value. Much of the metal's rally to record highs came on the back of last year's round of easing.
Holdings in the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust
Asset returns in 2011: http://r.reuters.com/suz52s
Gold correlation with dollar: http://r.reuters.com/ryx52s
Inflation adjusted gold price: http://r.reuters.com/pun62s
Gold in different currencies: http://r.reuters.com/wun62s
Gold/silver ratio: http://r.reuters.com/xyx52s
Gold/platinum ratio: http://link.reuters.com/xez92s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Silver
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