* Warren Buffett invests $5 billion in Goldman Sachs
* Dollar weaker against euro on fears over U.S. rescue plan
* SPDR Gold Trust bullion holdings jump 2 pct to record
(Recasts, updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Sept 24 (Reuters) - Gold was softer in Europe on
Wednesday as risk appetite improved, but came off early lows
as the dollar weakened against the euro and oil prices rose.
Spot gold edged down to $888.10/890.10 an ounce at 0918 GMT,
against $890.70 at the nominal New York close on Tuesday.
The precious metal came under pressure from fresh optimism
over the health of the financial sector on news that Warren
Buffett is investing $5 billion in Goldman Sachs <GS.N>.
A recovery in risk appetite is likely to curb interest in
gold, which has benefited from safe-haven buying amid volatility
in the equity markets and worries over the outlook fpr the
financial sector -- especially debt-burdened banks.
"The situation (in the financial markets) is calming down a
little bit," Deutsche Bank metals trader Michael Blumenroth
said. "This time last week people were very nervous."
"The Goldman news shows people are trusting banks again, and
are willing to invest in banks again," he added.
But the softer dollar is supporting gold, which often is
bought as an alternative investment to the U.S. currency.
The euro rose after the German Ifo business confidence
indicator came in less weak than expected, and on uncertainty
over the effectiveness of the U.S. government's proposed $700
million plan to shore up the financial system. []
The other main external driver of gold, crude oil, is also
trending higher, adding more than $1 a barrel as forecasts for a
drop in U.S. crude stocks more than outweighed worries over the
government's financial rescue plan.
Traders are keenly awaiting the U.S. crude inventory report,
due out at 1435 GMT, for signs as to the next move in oil
prices, as well as a host of U.S. economic data.
"The main data release today that may impact on the precious
metals are U.S. existing home sales for August -- with consensus
expectations looking for a 1.0 percent month-on-month decline,"
Standard Bank metals analyst Leon Westgate in a note said.
"The U.S. DOE Crude Oil inventory data for the week ending
September 19th may also be an important factor later this
afternoon."
ETF HOLDINGS HIT RECORD
Investment demand for gold meanwhile remained firm. The SPDR
Gold Trust, the world's largest gold-backed exchange traded
fund, said its holdings rose to a record for the second day
running on September 23, and now stand at 724.94 tonnes.
The trust's holdings have risen by more than 100 tonnes
since Lehman Brothers announced it was seeking bankruptcy
protection on September 15. []
Silver ETFs have also reported strong inflows. The world's
largest silver-backed ETF, iShares Silver Trust <SLV.A>, said
its holdings currently stand at a record 6,728 tonnes, up 295
tonnes or nearly 5 percent since September 15.
Spot silver <XAG=> was at $13.29/13.37 against $13.21 at the
nominal New York close on Tuesday.
Among other precious metals, platinum and palladium edged
higher. The two metals, which are primarily industrial in use,
have not benefited from the same investment flows as gold and
silver as a result of the financial crisis.
They have both suffered from the poor outlook for the
automotive sector, a major user of the metals, analysts said.
Spot platinum <XPT=> was at $1,221.50/1,241.50 an ounce, up
from $1,213 at the nominal New York close on Tuesday, while
palladium <XPD=> was at $249.50/257.50 an ounce against $245.
(Reporting by Jan Harvey; Editing by Michael Roddy)
