* Gold underpinned by worries about U.S. bailout plan
* U.S. Mint suspends some gold coins due to depletion
* Market looks ahead to Indian festival season
(Recasts, updates with details, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Pratima Desai
NEW YORK/LONDON, Sept 25 (Reuters) - Gold dipped on
Thursday but analysts expected fears about the fate of the $700
billion Wall Street bailout plan to support bullion prices.
Physical buying for gold remained strong as investors
turned to precious metals as a safe haven amid financial
turmoil. The U.S. Mint suspended the sale of some popular gold
coins as soaring demand depleted its inventory.
Spot gold <XAU=> was at $873.20/876.20 an ounce at 3:20
p.m. EDT (1820 GMT), down 0.9 percent from gold's nominal
Wednesday close at $881. Earlier on Thursday it rose nearly 2
percent to $896.60 an ounce.
It fell more than 2 percent to $862.85 an ounce after the
U.S. open as equity markets firmed and traders sold to cover
positions related to the expiration of COMEX October gold
options on Thursday, said RBC Capital Markets Global Futures
Vice President George Gero.
The metal has gained about 20 percent since Sept. 11, when
a collapse in the share price of U.S. investment bank Lehman
Brothers <LEHMQ.PK> raised questions about the stability of the
U.S. and global financial sector.
"Weekends recently have tended to be perilous times," said
Nick Moore, commodities strategist at RBS. "There is concern
that the weekend could bring fresh concerns about the bailout
plan because of political dragging."
The U.S. Congress was close to a deal to approve the
package, but investors are wary. []
Gold is used as hedge against financial chaos.
"Gold prices are rising as the era of loose credit draws to
a close and the ensuing global crisis leaves few solid
instruments for cautious investors to hold onto," said
investment bank Fairfax in a note.
U.S. gold contract for December delivery <GCZ8> settled
down $13.00, or 1.5 percent, at $882.00 an ounce on the COMEX
division of the New York Mercantile Exchange.
PHYSICAL DEMAND SOARS
The U.S Mint told dealers on Thursday it again was
temporarily suspending sales of American Buffalo 24-karat gold
one-ounce bullion coins.
In mid-August, a shortage of American Eagle one-ounce gold
coins due to "unprecedented" demand had forced the U.S. Mint to
temporarily suspend sales of the popular coins.
Coin dealers in North America have reported a surge in
buying of bullion coins and other gold products as troubles in
the financial markets prompted people to seek a safe haven in
precious metals.
Looking ahead, gold should draw support from physical
demand in the world's largest consumer India, which is
approaching its traditional wedding and festival season.
Also on the agenda is the end of the fourth year of the
Central Bank Gold Agreement on Friday.
The World Gold Council said last month around 319 tonnes of
gold have been sold so far by the European Central Banks that
signed the agreement, out of a quota of 500 tonnes allowed in
each year.
"It will be interesting to see how much of the allocation
has been taken," Moore said. "It looks as if it could be fully
taken up."
While that news may temporarily faze the market, it is
unlikely to do any lasting damage to confidence in gold's
ability to weather the financial and economic storms.
A measure of investor interest in gold is the record
holdings in SPDR Gold Trust <GLD.P>, the world's largest
gold-backed exchange-traded fund, which on Sept. 23 hit a
record 724.94 tonnes. <XAUEXT-NYS-TT>.
SPDR has seen its holdings increase by 18 percent, or more
than 100 tonnes, since Sept. 15.
Platinum <XPT=> was at $1,172.00/1,196.00 from $1,192.50
late on Wednesday, palladium <XPD=> at $230.50/238.50 from
$246, and silver at <XAG=> $13.15/13.25 an ounce, down from
Wednesday's nominal close of $13.21 an ounce.
(Additional reporting by Lewa Pardomuan in Singapore; Editing
by David Gregorio)
