* Gold up after Lehman news but off highs on oil, ETF sales
* Lehman bankruptcy fuels gold buying as haven from risk
* ETF Securities' Physical Gold holdings down 16 pct
By Jan Harvey
(Recasts, changes dateline, pvs SINGAPORE)
LONDON, Sept 15 (Reuters) - Gold climbed more than 2 percent
after Lehman Brothers filed for bankruptcy protection, spurring
buying of gold as a safe haven from risk and knocking the dollar
to two-month lows against the yen.
However, the precious metal retreated from highs as oil
prices slipped and selling of gold held by exchange-traded funds
dented investor confidence.
Spot gold <XAU=> was at $772.90/774.10 at 1022 GMT, up $9.45
from Friday's nominal close in New York but off session highs of
$784.90.
"With the kind of turmoil we have had at Lehmans, you would
think there would have been a bit more of a boost," said
Standard Chartered analyst Daniel Smith.
"The rebound has been a bit disappointing, given the rally
we've seen in other markets such as base metals."
Gold rose sharply earlier in the session as news broke of
Lehman's bankruptcy, spurring buying of gold as a safe haven and
pressuring the dollar. []
A weaker dollar typically benefits gold as it boosts the
precious metal's appeal as an alternative investment.
"News that Lehmans is filing for bankruptcy raised concerns
over the US economy, thereby causing the dollar to weaken and
investors to seek "safe" assets," said Fairfax analyst John
Meyer.
"Gold is generally viewed as a safe haven in time of
economic trouble."
Traders were further spooked by news that Bank of America
has agreed to buy Merrill Lynch, increasing fears over the
stability of the global financial system. []
The Federal Reserve announced emergency measures on Sunday
to safeguard the financial system, including accepting equities
as collateral for cash loans. []
Dealers are awaiting the Fed's interest rates decision due
on Tuesday for clues as to the future direction of the U.S.
currency.
Gold's other main external driver, crude oil, fell more than
$4 to below $100 a barrel as Hurricane Ike spared most Gulf of
Mexico oil infrastructure, reducing investors' interest in gold
as an inflation hedge, analysts said. []
"Crude oil is trading significantly below the $100/bbl mark,
which is limiting the rebound of gold," said Dresdner Kleinwort
in a note.
ETF SALES
Investor selling of gold held by exchange-traded funds is
also knocking confidence in the precious metal, analysts said.
ETF Securities said on Monday that the amount of gold it
holds to back its Physical Gold <PHAU.L> exchange-traded
commodity fell 16 percent last week to 1.551 million ounces.
[]
The world's biggest gold-backed ETF, SPDR Gold Trust, said
its holdings have fallen more than 37 tonnes, or 5 percent,
since the beginning of September.
"The ETFs have been liquidating in terms of gold," said
Daniel Smith. "SPDR and ETF Securities have shown significant
reduction in recent weeks."
"It may be distress-type liquidation -- selling gold to
cover other losses," he added.
Among other precious metals, platinum and palladium headed
lower after last week's bounce. Spot platinum <XPT=> was down
$17.50 at $1,185.00/1,205.00 an ounce, while palladium <XPD=>
fell $11 to $231.50/241.50.
Spot silver <XAG=> slipped 3 cents to $10.80/10.88 an ounce.
Earlier it rallied 3 percent in line with gold to a session high
of $11.15 an ounce.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
