* Dollar firms on flight to quality
* U.S. lawmakers reject bid $700 billion bailout plan
* Platinum, palladium tumble as demand fears bite
(Recasts, updates, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Sept 30 (Reuters) - Gold slipped below $900 an ounce
in Europe on Tuesday as a firmer dollar and weakness in other
commodities such as oil and industrial metals encouraged profit-
taking.
Platinum and palladium tumbled as investors worried about
the outlook for carmakers who are major consumers of the
platinum group metals.
Spot gold <XAU=> was quoted at $897.90/899.90 at 0930 GMT
against $903.25 an ounce at the nominal New York close on
Monday.
"I am surprised gold is not higher," said Deutsche Bank
trader Michael Blumenroth. "But the market is very long since we
had the $100 move two weeks ago."
"Investors are starting to take their profits in the gold
market," he added. "They don't want to leave it in any
investment, they just want dollars."
The dollar rebounded against the euro and the yen, as
investors cut back on risky positions after an emergency plan to
rescue the troubled U.S. financial sector was rejected by
lawmakers. []
Both oil and industrial metals fell sharply on Tuesday in
the wake of the news, with oil sliding more than $2 a barrel,
nickel, lead and tin all falling 5 percent and copper 4 percent.
The markets are jittery after equities fell in Asia and
Europe after the U.S. House of Representatives' shock rejection
of a $700 billion plan to bail out beleagured financial
institutions. []
U.S. stock markets plummeted, but safe haven assets such as
treasury bills and gold soared, with the precious metal
rocketing nearly 5 percent to $920 an ounce.
However gold failed to hold gains, as even the traditional
safe haven metal fell victim to selling pressure. But despite
early profit-taking, traders say the metal is still outperfoming
other assets.
"Gold is performing better than any other commodity at the
moment," said Blumenroth. "Other commodities such as platinum or
oil are all going south, and gold is just holding this level."
LBMA SEES GOLD HIGHER
A poll of delegates to the London Bullion Market Association
annual conference in Kyoto showed they believe spot gold will
rise by about 6 percent to $958.60 by November next year, while
platinum and palladium prices are expected to soar.
[]
Among other precious metals, silver was quoted at
$13.02/13.10 an ounce against $13.07 at the nominal New York
close on Monday.
The platinum group metals slipped sharply as investors
worried about the outlook for demand from carmakers, who are
major consumers of the metals for use in catalytic converters.
"Platinum is largely an industrial metal with its main
market being in autocatalysts," said Fairfax analyst John Meyer.
"Consequently, despite being a precious metal it does not
benefit in the same way as gold does during periods of weakening
economies."
Spot platinum <XPT=> was down nearly 4 percent to
$1,040/1,060 from $1,080 an ounce at the nominal New York close
on Monday, while palladium <XPD=> slid more than 1 percent to
$208.50/216.50 from $211.50.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
