* Gold up 1 pct as House rejects bailout, but then slips
* Platinum hits lowest in more than two years on demand
worry
(Recasts, adds LBMA forecast)
By Lewa Pardomuan
SINGAPORE, Sept 30 (Reuters) - Gold softened on Tuesday
after rising more than 1 percent as U.S. lawmakers rejected a
$700 billion bailout plan, but turmoil in the financial market
which sent share prices sliding kept its safe-haven appeal
intact.
The Nikkei average <> tumbled nearly 5 percent to hit
a three-year low after the Dow industrials plunged in their
biggest decline ever on Monday following the rejection of the
plan to buy up toxic assets from struggling banks.
Spot gold <XAU=> was trading at $898.85 an ounce, down
$4.40 from New York's notional close, having hit an intraday
day high of $914. Gold held near a two-month high of $920 hit
on Monday but was still below a lifetime high of $1,030.80
struck in March.
"The gold market is telling us that the world economy is in
peril," said Jeffrey Nichols, managing director of American
Precious Metals Advisors.
"In the short run, any meaningful policy response that
reduces fear and anxiety could trigger a correction in gold --
but, longer term, whatever happens, gold is almost certainly
moving higher," he said.
U.S. lawmakers rejected a $700 billion bailout plan for the
financial industry in a shock vote that sent global markets
falling as European authorities scrambled to prop up a slew of
banks. []
"I expect gold will breach the $1,000 an ounce level and
move to new historic highs before year-end 2008 or in the early
months of next year," said Nichols.
Gold has benefited from a wave of risk aversion after U.S.
investment bank Lehman Brothers filed for bankruptcy
protection. On Sept. 17, gold saw the largest one-day dollar
price rise in history.
Gold's attraction as an alternative investment has helped
boost prices by over 23 percent in 2008. It hit $850 in 1980 on
a combination of high inflation linked to oil prices, the
Soviet invasion of Afghanistan and the impact of the Iranian
revolution.
After adjusting for inflation, the 1980 high is equivalent
to $2,119.30 an ounce at 2007 prices. The average for the whole
of 1980 has been calculated at $1,532.14, according to precious
metals consultancy GFMS Ltd.
But delegates at the London Bullion Market Association's
conference expected gold prices to rise a modest 6 percent over
the next year to around $959 an ounce, as the U.S. dollar
weakens and the financial crisis eases. []
"In the near term, I will be looking at the regions around
$920 for a stronger move. I believe if we start moving
significantly above those regions, gold's going to head much
higher," said Adrian Koh, analyst at Phillip Futures.
"Platinum is still closely tied to the economy and things
don't look very good now. An economic slowdown is going to
weigh heavily on platinum demand and auto stocks in Japan are
really hurting on the bailout plan," he said.
Platinum <XPT=> was trading at $1,044.50 an ounce, down
$35.50 from New York's notional close. It hit an intraday low
of $1,038 an ounce, its weakest since March 2006.
Japan's Toyota Motor Corp <7203.T> said it started cutting
production in China as sales growth in the region fails to meet
expectations. Car sales growth in China slowed to 17.07 percent
in thefirst half after rising 20 percent or more annually since
2005.
Gold futures for December delivery <GCZ8> on the COMEX
division of the New York Mercantile Exchange rose $10.2 an
ounce to $904.6 an ounce.
Precious metals prices at 0444 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 898.85 -4.40 -0.49 7.94
Spot Silver 13.04 -0.03 -0.23 -11.71
Spot Platinum 1044.50 -35.50 -3.29 -31.28
Spot Palladium 209.00 -2.50 -1.18 -43.21
TOCOM Gold 3006.00 31.00 +1.04 -1.76
27719
TOCOM Platinum 3482.00 -275.00 -7.32 -34.78
15135
TOCOM Silver 435.90 -4.30 -0.98 -19.43
989
TOCOM Palladium 711.00 -38.00 -5.07 -47.37
1098
Euro/Dollar 1.4361
Dollar/Yen 104.20
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa in Tokyo; Editing by
Ben Tan)
