* Gold down over 1 pct as investors sell to raise cash
* Bullion seen as more risky along with other commods
* Platinum slides 4 pct to lowest since January 2007
(Update prices to afternoon, add comments)
By Chikafumi Hodo
TOKYO, Sept 16 (Reuters) - Gold dropped 1.5 percent on
Tuesday as investors viewed bullion as a risky asset,
preferring to lock in their positions to raise cash amid
deepening financial turmoil after the implosion of Lehman
Brothers <LEH.P>.
Though gold normally gains on safe-haven buying during
financial crises because its value is not tied to fiat money,
portfolio managers were keen to shed positions in commodities
after Lehman's bankruptcy, the takeover of Merrill Lynch
<MER.N>, and fears major insurer American International Group
<AIG.N> needed to raise additional capital.
As of 0450 GMT, spot gold <XAU=> fell 1.5 percent, or
$11.90, to $774.30 an ounce from Monday's nominal close in New
York.
"Safe-haven demand lifted gold back to nearly $800. But
profit-taking emerged after seeing the market run of steam as
the market focused more closely on the financial problem," said
Tatsuo Kageyama, analyst at Kanetsu Asset Management in Tokyo.
"Investors want to hold cash or bonds. Gold was bought
initially, but basically many investors treat gold and other
commodities as risky assets."
Precious metals were undermined on selling led by Japanese
investors returning from a three-day weekend, with a sharp drop
in oil prices also weighing on prices.
Market participants will closely watch the outcome of the
Federal Reserve's policy-setting meeting later in the day.
There is talk the central bank could ease interest rates at the
meeting, though analysts say they are not expecting the Fed to
loosen its monetary policy.
COMEX gold futures fell on Tuesday after jumping nearly 3
percent in New York on Monday. The most active December
contract <GCZ8> was trading down $8.0 or 1 percent at $779.0
from the New York settlement.
The benchmark August 2009 gold contract on the Tokyo
Commodity Exchange <0#JAU:> was down 9 yen or 0.3 percent at
2,609 yen per gram from Friday's close.
"Investors are cutting their risk positions as
uncertainties are increasing with share prices falling and also
crude prices quickly plunging to near $90," said Shuji Sugata,
a manager at Mitsubishi Corp Futures and Securities in Tokyo.
"Some bargain-hunting could emerge as gold is still
slightly more supported than other commodities, but you simply
cannot build new buy positions aggressively from here," Sugata
said.
Crude oil prices slumped nearly $3 to a seven-month low as
the collapse of Lehman ignited fears that the credit crisis may
weaken the global economy and further depress energy demand.
[]
Platinum plunged as the failure of Lehman deepened concerns
over the global economy and demand for the white metal.
Spot platinum <XPT=> dropped more than 4 percent to as far
as $1,110 an ounce -- the lowest since January 2007.
Tokyo platinum futures <0#JPL:> fell more than 7 percent to
as far as 3,705 yen a gram, the lowest for a benchmark since
January 2006.
Platinum, mainly used in autocatalysts, has been hit by
heavy selling due to a slowing U.S. economy and poor car sales
in the United States, Japan and China. It struck a record high
of $2,290 an ounce in March.
Palladium <XPD=> tumbled more than 5 percent, falling in
line with platinum.
Precious metals prices at 0448 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 774.75 -11.45 -1.46 -6.96
Spot Silver 10.68 -0.42 -3.78 -27.69
Spot Platinum 1115.00 -50.00 -4.29 -26.64
Spot Palladium 219.50 -12.50 -5.39 -40.35
TOCOM Gold 2605.00 -13.00 -0.50 -14.87
31493
TOCOM Platinum 3716.00 -287.00 -7.17 -30.40
13873
TOCOM Silver 360.30 -16.70 -4.43 -33.40
1039
TOCOM Palladium 760.00 -89.00 -10.48 -43.75
777
Euro/Dollar 1.4233
Dollar/Yen 104.37
TOCOM prices in yen per gram, except for silver which is in
yen per 10 grams, spot prices in $ per ounce.
(Editing by Ben Tan)
