* Gold up 1 percent as House rejects bailout, but then
slips
* Platinum hits lowest in more than two years on demand
worry
(Updates prices, adds comments on jewellery sector)
By Lewa Pardomuan
SINGAPORE, Sept 30 (Reuters) - Gold softened on Tuesday
after rising more than 1 percent earlier in the day as U.S.
lawmakers rejected a $700 billion bailout plan, but turmoil in
the financial market 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 $896.65 an ounce, down
$6.60 from New York's notional close, having hit an intraday
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 jewellery sector, which accounts for almost 70 percent
of global demand for gold, was on the sidelines.
"The jewellery sector is not active at the moment.
Otherwise, the price should have gone up a lot. It's too high
to buy at above $900," said Ronald Leung, director of Lee
Cheong Gold Dealers in Hong Kong, referring to early gains.
"For the time being, you can see support at $850 to $865,"
said Leung, referring to levels last seen in August.
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. []
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.
"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.
Gold 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.
"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.
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. []
Platinum <XPT=> was trading at $1,029.50 an ounce, down
$50.50 from New York's notional close. It hit an intraday low
of $1,028.00 an ounce, its weakest since March 2006, as
automakers cut production targets due to a slowing U.S.
economy.
"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," said Adrian Koh, analyst
at Phillip Futures.
New York gold futures <GCZ8> rose $9.2 an ounce to $903.2.
Precious metals prices at 0737 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 896.65 -6.60 -0.73 7.68
Spot Silver 12.94 -0.13 -0.99 -12.39
Spot Platinum 1029.50 -50.50 -4.68 -32.27
Spot Palladium 201.50 -10.00 -4.73 -45.24
TOCOM Gold 3013.00 38.00 +1.28 -1.54
53158
TOCOM Platinum 3457.00 -300.00 -7.99 -35.25
22232
TOCOM Silver 433.60 -6.60 -1.50 -19.85
1254
TOCOM Palladium 679.00 -70.00 -9.35 -49.74
1365
Euro/Dollar 1.4387
Dollar/Yen 104.58
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
Michael Urquhart)
