* Gold's uptrend intact, near-term target seen at $1,050/oz
* SPDR Gold holdings <XAUEXT-NYS-TT> inch up 0.2 pct
(Recasts, updates prices and comments)
By Humeyra Pamuk and Veronica Brown
LONDON, Oct 7 (Reuters) - Gold set record highs for a second
straight session on Wednesday as dollar weakness and mounting
worries about potential inflation polished the precious metal's
appeal to investors.
Spot gold <XAU=> hit a historic $1,048.20 an ounce, before
easing to $1,040.50 an ounce by 1558 GMT, versus $1,040.85
quoted late in New York on Tuesday. U.S. December gold futures
<GCZ9> hit a new peak of $1,049.70 an ounce.
Gains were clipped as the dollar arrested its slide versus a
basket of currencies, while strong chart-based resistance at
$1,050 per ounce also weighed.
Other precious metals basked in gold's glow with palladium
<XPD=> hitting $313.50 an ounce, its highest since August 2008
while platinum rose to a two-week high <XPT=> and silver <XAG=>
to a three-week high.
Analysts said momentum was set to remain broadly in the
market's favour.
"When the market moves this much in the space of two days,
you have to expect it to pause for breath. But we don't see too
many signs of people looking to bail out and take profits here,"
said Tom Kendall, metals analyst at Mitsubishi Corp in London.
For a graphic on rise rise vs the dollar's loss:
http://graphics.thomsonreuters.com/109/CMD_GLDPRF1009.gif
For graphic on gold's correlation with stocks, the dollar
and oil:
http://graphics.thomsonreuters.com/109/GLD_PRCCRR1009.gif
The dollar swung into positive territory, having earlier
been on the defensive versus a basket of currencies. []
Bullion has gained nearly 20 percent this year, helped by
dollar weakness and on the back of escalating inflation worries
after central banks and governments across the globe poured
billions of dollars into the financial system to revive growth.
Daniel Sacks, Co-Portfolio Manager of the Investec Global
Gold Fund, said gold prices were set to test new highs as the
fourth quarter progresses.
"We believe it should continue to perform well against most
assets into the final quarter of 2009. Moreover, the price of
gold is still just over half of its prior peak in "real" terms,
even after the rally of the past eight years," he said in a note
to clients.
Metals consultancy GFMS has put the inflation-adjusted peak
for gold as high as $2,079 an ounce.
For a graphic on inflation adjusted gold price:
http://graphics.thomsonreuters.com/109/GLD_PRCINF1009.gif
WEAKER PHYSICAL DEMAND?
Gold's rally has boosted flows into exchange traded funds
(ETF). The world's largest gold-backed ETF, the SPDR Gold Trust
<GLD>, said its holdings stood at 1,100.514 tonnes as of Oct. 6,
up 0.2 percent or 2.441 tonnes from the previous business day
for the third consecutive day of increase.<XAUEXT-NYS-TT>
"The surge in demand for gold does not appear to be short
term in nature as we have been seeing very rapid growth of
investor holdings of gold through our ETCs for over a year now,"
said Nicholas Brooks, Head of Research and Investment Strategy
at ETF Securities.
ETF Securities' said its total gold holdings now stand at
8.3 million ounces, up 110 percent over the past two years.
However, the high prices are set to curb demand for physical
gold, some analysts said, potentially weakening the fundamental
case for gold's sustainable rally.
"The ETFs are attracting some inflows but those by no means
can compensate for the falling physical demand from the
jewellery side," Commerzbank analyst Eugen Weinberg said. "In
India, I think despite the festive season there, demand will be
very weak given current prices," he said.
For a story on physical gold demand click on []
Silver <XAG=> rose to $17.55 an ounce, its highest since
September 17, and was last at $17.41 an ounce versus $17.32 an
ounce last quoted in New York on Tuesday.
Platinum <XPT=> climbed to $1,338 an ounce, its highest
since September 23 and was last at $1,319.00 an ounce from
$1,313.50 an ounce.
Palladium <XPD=> was at $312.00 an ounce versus $305.50.
For a graphic on gold's price in dollars and euros, click
on:
http://graphics.thomsonreuters.com/109/GLD_PRCEUR1009.gif
Also see TAKE A LOOK-Gold hits record high on []
(Reporting by Humeyra Pamuk, Editing by William Hardy)
