* Financial sector woes spur flight to safety
* World cenbanks offer to pump billions into money markets
* SPDR Gold Trust reports 6 pct inflow in bullion holdings
(Adds comment, updates prices)
By Jan Harvey
LONDON, Sept 18 (Reuters) - Gold hit a near six-week high on
Thursday in choppy trade as traders rushed to buy it as a safe
haven on fears of more trouble ahead for the financial sector.
A bounce in U.S. equities after a central bank liquidity
injection into the money market brought the metal down from
session highs but did not severely pressure gold.
Spot gold <XAU=> traded at $861.35/862.85 at 1433 GMT
against $862.70 an ounce at the nominal New York close on
Tuesday. Earlier it hit a session high of $892.10.
"What we are seeing right now is investors seeking safe
heaven in the gold market," Saxo Bank global products manager
Philip Carlsson said. "These market conditions makes it
difficult to predict about where we are headed."
"After such an increase in the gold market over the past two
days, a correction could be due," he added. "But again,
fundamental or technical analysis is not always in play when
investors are getting spooked, as we are seeing."
Gold recorded a relatively volatile session, trading within
a broad $40 range.
Central banks including the U.S. Federal Reserve, the
European Central Bank and the Bank of Japan, announced measures
to boost liquidity in the money market. []
"The central bank action has served to ease some stresses in
the interbank market," said Calyon metals analyst Robin Bhar.
A firmer opening on Wall Street in the wake of the injection
whetted risk appetite, pressuring gold from highs.
However, on foreign exchange markets the U.S. dollar dropped
to a two-week low against the euro as the central bank liquidity
injection calmed money markets. A weaker dollar benefits gold.
CRISIS
The precious metal soared $90 an ounce on Wednesday, its
biggest one-day dollar rise in history, as stock markets slumped
and investors panicked over the future of the financial sector,
after a major U.S. money market mutual fund slid in value.
Banks are now running scared of lending to each other,
analysts said, and risk aversion is rife.
"What is left for people to put their money in?" Afshin
Nabavi, head of trading at MKS Finance, asked. "They can't trust
the banks, they can't trust insurance companies, they can't
trust the stock markets."
Gold is one of the few trustworthy assets left, he said.
"Despite the sharp move gold had on the downside (recently),
compared to everything else -- oil, platinum, other commodities
-- it actually held up well," he added.
Investment demand picked up strongly, with the world's
largest gold-backed exchange-traded fund, the SPDR Gold Trust
<GLD>, reporting an inflow of 36.46 tonnes or 6 percent on
Wednesday. []
The move brought the trust's holdings to 650.81 tonnes, a
two-and-a-half-week high.
Among other precious metals, silver tracked gold higher,
rising 5 percent to a session high of $12.69, before easing back
to trade at $12.18/12.23 against $12.00 an ounce at the nominal
New York close on Wednesday.
Platinum and palladium failed to capitalise on bullion's
rise, instead tracking losses in base metals as investors
worried about the outlook for demand.
Platinum was at $1,101.00/1,125.00 against $1,118.00, while
palladium was at $227.00/235.00 against $243.00.
(Reporting by Jan Harvey; Editing by Michael Roddy)
