* Gold reverses early gains after biggest gain ever on Weds
* Short-term players lift gold early, dollar little help
(Update with comments, prices)
By Risa Maeda
TOKYO, Sept 18 (Reuters) - Gold reversed earlier gains to
fall below $860 per ounce on Thursday, down about 0.4 percent
from the previous day, as buying ran out of steam.
It had earlier risen by more than 3 percent to $892.10,
extending its biggest ever one-day rise in absolute dollar
terms on Wednesday, when buyers flocked to the precious metal
as a safe haven asset, and as a hedge against falling stocks.
Buying by Japanese investors had helped gold touch its
highest level since Aug. 5 after distant gold futures contracts
on the Tokyo Commodity Exchange rose by their daily limit,
forcing them to buy cash gold, traders said.
"It was a run from paper assets to gold," said Hitoshi
Inagawa, senior manager at Tokyo-based broker Yutaka Shoji Co,
referring to gold's surge in New York.
"But somehow I didn't feel similar zeal in Asia. Gold had
extended gains (until recently), but that was more or less led
by buying in the futures markets, which bolstered the price of
bullion," he said.
Gold received little help from the dollar, which was
stabilising against major currencies, and a halt in an oil
price rally.
The dollar fell against the euro on Thursday, but the loss
was small when compared with Wednesday, when the U.S.
government's rescue of insurer AIG failed to calm investor
concerns about the stability of the U.S. financial sector.
U.S. crude <CLc1> was little changed on Thursday at $97.27
a barrel, after surging $6 on Wednesday, the largest one-day
percentage gain in three months, as a U.S. government report
showed a fall in oil stocks after hurricanes hit the Gulf
Coast.
Spot gold stood at $859.40 as of 0341 GMT, down 0.4 percent
from the notional close in New York on Wednesday, when it
surged more than 10 percent or nearly $90, exceeding the
previous biggest one-day gain in 1980.
Gloom over the financial industry's outlook remained on
Thursday, with investors scanning the horizon for the next
possible victim even after U.S. authorities bailed out insurer
American International Group <AIG.N> with an $85 billion rescue
plan, Lehman Brothers collapsed and Merrill Lynch got bought.
U.S. stocks dropped more than 3 percent on persistent
worries about the health of the U.S. financial industry, and
Asian stock markets followed with 3-6 percent losses on
Thursday.
COMEX gold held onto gains after rising 9 percent on
Wednesday. The most active December contract was trading up
$11.5 or 1.4 percent at $862.0 from the New York settlement.
Benchmark TOCOM gold futures for August 2009 delivery
jumped by the daily 150 yen limit to 2,808 yen per gram. It
rose 5.6 percent from Wednesday.
The spot October contract, which is not bound to the daily
limit, was up 217 yen at 2,866 yen.
Spot platinum slipped slightly to $1,110.50 per ounce after
rising by more than 3 percent to as high as $1,155.50 earlier
on Thursday, bouncing from a two-year low after prices nearly
halved since July on weakening demand from car makers.
Precious metals prices at 0358 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 856.80 -5.90 -0.68 2.89
Spot Silver 11.99 -0.01 -0.08 -18.82
Spot Platinum 1110.50 -7.50 -0.67 -26.94
Spot Palladium 236.00 -7.00 -2.88 -35.87
TOCOM Gold 2808.00 150.00 +5.64 -8.24
2386
TOCOM Platinum 3700.00 18.00 +0.49 -30.70
15008
TOCOM Silver 402.10 40.00 +11.05 -25.67
121
TOCOM Palladium 810.00 17.00 +2.14 -40.04
629
Euro/Dollar 1.4357
Dollar/Yen 104.42
TOCOM prices in yen per gram, except for silver which is in
yen per 10 grams, spot prices in $ per ounce.
(Reporting by Risa Maeda; Editing by Clarence Fernandez)
