* Gold bounces after oil-led falls
* Platinum down over 6 percent, demand worries resurface
* Oil below $89 on fears of falling demand
(Recasts, adds quotes)
By Lewa Pardomuan
SINGAPORE, Oct 8 (Reuters) - Gold rebounded on Wednesday as
safe-haven buying picked up after the Nikkei posted its biggest
one-day drop since the 1987 stock market crash, helping lift
holdings in the world's largest bullion-backed exchange-traded
fund.
Platinum dropped more than 6 percent as poor sentiment
offset a recent rally which had pushed the price back to the
$1,000 level on Tuesday.
Gold <XAU=> was trading at $887.90 an ounce, up $1.30 from
New York's notional close on Tuesday, when it jumped to a
one-week high of $890.60 an ounce on losses in stock markets.
It hit an intraday low of $877.20 on Wednesday.
The Nikkei <> plunged 9.4 percent on Wednesday as fear
spread of a global recession, with panic over the
fast-spreading financial crisis dragging down markets across
Asia. []
"The downside risks to gold seem mitigated by the strength
of physical demand for investment-grade jewellery and small
bars in the important gold markets of the Middle East, India,
China, and other parts of Asia," said Jeffrey Nichols, managing
director of American Precious Metals Advisors. Holdings in the
world's largest gold-backed ETF, the SPDR Gold Trust <GLD>,
rose to 745.22 tonnes as of Oct. 8 from 744.54 tonne as of Oct.
7. <XAUEXT-NYS-TT>.
"This is a good time to buy gold. Stock prices are not so
good. ETF is a good support for gold prices. This is the actual
investment buying," said Yukuji Sonoda, precious metals analyst
at Daiichi Commodities in Tokyo.
"The upside targets are $900 or $920," he said.
Gold hovered around $900 late last month, hitting a
two-month high of $920 on Sept. 29 on a weaker U.S. dollar. The
metal was well below a lifetime high of $1,030.80 struck in
March.
Oil <CLc1> fell below $89 a barrel as concerns the global
financial crisis will curb demand for fuels overshadowed signs
that producer group OPEC was considering a supply cut. []
In theory, weaker oil prices reduce gold's safe haven
appeal, but a tumbling stock market raised the metal's appeal
as an alternative investment.
"I think we are still watching developments in Europe, and
whether interest rates will go down worldwide. People are
buying gold for safe-haven purposes," said Ronald Leung,
director of Lee Cheong Gold Dealers in Hong Kong.
Hong Kong said it will slash its main interest rate by up
to 100 basis points, the biggest cut since the benchmark
started a decade ago, as central banks around the world stepped
up efforts to halt a growing credit crunch. []
Platinum <XPT=> was trading at $952.00 an ounce, down
$52.00 from New York's notional close to track weaker gold,
having regained $1,000 on Tuesday.
Platinum has been hit by heavy selling on fears of falling
demand for autocatalysts. It tumbled to $920 an ounce on
Monday, its lowest level since November 2005, on the back of
poor car sales, especially in the United States.
Prices are well below a lifetime high of $2,290 an ounce
struck in March.
New York gold futures <GCZ8> added $7.5 to $889.5 an
ounce.
Precious metals prices at 0614 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 887.90 1.30 +0.15 6.63
Spot Silver 11.46 -0.05 -0.43 -22.41
Spot Platinum 952.00 -52.00 -5.18 -37.37
Spot Palladium 195.00 1.00 +0.52 -47.01
TOCOM Gold 2828.00 -5.00 -0.18 -7.58
42960
TOCOM Platinum 3035.00 -209.00 -6.44 -43.15
22401
TOCOM Silver 364.80 -12.20 -3.24 -32.57
971
TOCOM Palladium 648.00 -25.00 -3.71 -52.04
318
Euro/Dollar 1.3555
Dollar/Yen 100.22
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Michael Urquhart)
