* SPDR Gold Trust bullion holdings jump 2 pct to record
(Adds analyst comments, closing prices and market activity)
By Jan Harvey
LONDON, Sept 24 (Reuters) - Gold rose on Wednesday as
uncertainty over the future of the planned $700 billion U.S.
bail-out plan for the financial sector boosted safe-haven
buying.
But gains were capped by a cautious uptick in optimism, as
Warren Buffett's $5 billion investment in Goldman Sachs <GS.N>
was seen as a vote of confidence in the banking sector. This has
tempered some interest in gold as a safe haven, traders said.
Spot gold <XAU=> was quoted at $883.40/886.40 an ounce at
2:39 p.m. EDT (1839 GMT), down 0.8 percent from gold's nominal
Tuesday close of $890.70.
"The bailout package of Treasury Secretary Hank Paulson did
not get a well-received hearing yesterday in the U.S. Senate,"
said Dresdner Kleinwort consultant Peter Fertig.
Trading in commodity and financial markets remained volatile
as Paulson and Federal Reserve chairman Ben Bernanke testified
on their bailout plan, which would see officials use $700
billion of public money to buy up toxic banking assets, before
the U.S. House Financial Services Committee.
Uncertainty over whether the plan will be implemented, and
the implications if it is, are supporting gold.
However, traders say Buffett's announcement he is to invest
in Goldman Sachs cheered the market, keeping a lid on gains.
"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.
A slightly softer dollar is supporting gold, which often is
bought as an alternative investment to the U.S. currency.
Nagging worries over the health of the U.S. financial sector are
pressuring the dollar. []
Zachary Oxman, senior trader with Wisdom Financial, said
that gold could trade in a tight range between $875 and $920 as
investors reduced their exposure to market risk.
"Nobody wants to take a risk, because it's a deleveraging
play of everything," Oxman said.
U.S. gold contract for December delivery <GCZ8> settled up
$3.80 at $895.00 an ounce on the COMEX division of the New York
Mercantile Exchange.
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 Sept. 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 Sept. 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 $13.27/13.37 an ounce, up 0.5
percent from Tuesday's nominal close of $13.21 an ounce.
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.
Spot platinum <XPT=> was last quoted at $1,197.50/1,217.503
an ounce, down from $1,213 at the nominal New York close on
Tuesday, while palladium <XPD=> was at $247.50/255.50 an ounce
against its previous close of $245.
(Additional reporting by Frank Tang in New York)
