Gold slips, but seen buoyed by financial crisis

Pratima Desai
RETUERS
Thursday, September 25, 2008

LONDON, Sept 25 (Reuters) – Gold came under selling pressure on Thursday but analysts expect prices to be supported by fears the $700 billion bailout plan for investment banks in the United States could be derailed by Congress.

Spot gold was at $871.60/873.60 an ounce at 1455 GMT compared with $881.00 late in New York on Wednesday. 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 expiry of gold options — contracts which give holders the right to buy or sell at fixed prices.

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: Quote, Profile, Research, Stock Buzz) raised questions about the stability of the U.S. and global banking system.

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“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.”

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