* Gold dips 3 percent on fresh risk appetite, firm dollar
* U.S. officials to discuss plan to mop up risky bank assets
* Dollar up 0.8 pct versus the euro as plan cheers market
(Recasts, updates throughout, changes dateline, pvs TOKYO)
By Jan Harvey
LONDON, Sept 19 (Reuters) - Gold slipped nearly 3 percent in
Europe on Friday after the U.S. government announced it is
considering a plan to deal with risky bank assets, which boosted
the dollar and equities and restored risk appetite.
Gold's move reflected losses among other precious metals,
with platinum falling more than 3 percent to a 2-1/2 year low
and palladium shedding 4 percent. Silver was the only climber.
Spot gold <XAU=> was at $839.30/832.30 at 0945 GMT, down 1
percent from $847.25 at New York's nominal close on Thursday.
Earlier it touched a session low of $823.80.
"The dollar's getting a bit stronger. There seems to be a
little more confidence around," Standard Chartered metals
analyst Daniel Smith said.
"The spike we saw in gold over the last couple of days just
went too far, so we are seeing a bit of a counter-reaction to
that," he added. "It is looking for a floor at the moment."
Gold has benefitted from a wave of risk aversion that has
hit the markets this week after U.S. investment bank Lehman
Brothers filed for bankruptcy protection on Monday.
Prices soared nearly $140 an ounce from last Friday's
nominal New York close to this week's high, while Wednesday saw
the largest one-day dollar gold price rise in history.
The metal rallied above $900 an ounce in late Thursday trade
as investors fled rocky equity markets for safer assets such as
bullion.
But the U.S. government's consideration of a plan to tackle
the financial crisis has helped risk appetite to recover.
Officials said they are considering a taxpayer-funded mop-up
of toxic mortgage related debt. The dollar rose by 0.8 percent
against the euro and nearly 2 percent versus the yen after the
news, denting gold's appeal as a currency hedge. []
Equities are also recovering, having made up some ground on
Thursday after central banks announced concerted efforts to
inject fresh liquidity into the global money markets.
"Central banks' coordinated efforts to pump liquidity into
financial markets has supported equity market sentiment," said
Standard Bank analyst Manqoba Madinane.
"Equity index futures are pricing in gains in global equity
markets today. This might steal investors' attention and leave
precious metals adrift."
POTENTIAL REMAINS
But while in the short term analysts say gold is due for a
correction, in the longer term it may benefit from continued
uncertainty surrounding the financial sector, as well as tight
underlying fundamentals.
Investment demand remains firm, with the world's largest
bullion-backed exchange-traded fund, the SPDR Gold Trust <GLD>,
reporting a further 4.5 tonne inflow on Thursday. Its holdings
have risen nearly 7 percent since Monday. []
Demand for gold jewellery, coins and bars is also expected
to pick up as the festival season gets underway in major
consumer India, although high prices may curb buying.
Among other precious metals, platinum and palladium posted
losses as investors fretted over the demand outlook. The metals,
which are primarily used in the manufacture of autocatalysts,
are expected to suffer from a slowdown in car demand.
"Spreads (are widening) markedly as the market wonders if
cooling demand will outweigh investment potential," said Fairfax
analyst John Meyer.
"A retracement in gold prices may hold back the bulls as the
U.S. dollar strengthens slightly."
Spot platinum <XPT=> was at $1,075.00/1,095.00 against
$1,089.00 at the nominal New York close on Thursday, having
earlier touched $1,042.00, its lowest since March 2006.
Spot palladium <XPD=> was at $229.00/234.00 against $230.00,
up from a session low of $221.00. Silver was the only gainer,
edging up to $11.95/12.00 from $11.84.
(Reporting by Jan Harvey; Editing by Michael Roddy)
