* Gold rises as G20 sees more QE as early as November
* Palladium surges to highest level in nearly a decade
* Palladium supported by US proposal on truck efficiency
* Coming up: U.S. October consumer confidence due Tuesday
(Recasts, updates with comments, market activity, adds NEW
YORK byline/dateline)
By Frank Tang and Rebekah Curtis
NEW YORK/LONDON, Oct 25 (Reuters) - Gold rose 1 percent on
Monday, resuming its rally after its first weekly decline in
nearly three months, as a G20 agreement hardened expectations
that the Federal Reserve will pump more money into the
economy.
Silver surged 2 percent and palladium hit its highest price
in nearly a decade, as the dollar fell broadly after the G20
agreed to shun competitive currency devaluations but stopped
short of setting targets to reduce trade imbalances.
[]
"The differences still persist between countries as to what
constitutes proper monetary and currency policy," Commerzbank
analyst Daniel Briesemann said. "That means tensions between
different governments will continue and therefore gold should
stay in demand among investors."
Data showed sales of previously owned U.S. homes rose in
September, but remained at subdued levels that did little to
undermine the case for additional monetary stimulus next week
from the Fed to reinvigorate the economy, a process known as
quantitative easing (QE). []
Spot gold <XAU=> rose 0.7 percent to $1,336.42 an ounce at
12:33 p.m. EDT (1633 GMT). U.S. December gold futures <GCZ0>
climbed $11.40 to $1,336.50.
Analysts said the G20 finance ministers on Saturday pointed
to a status quo in currency markets and failed to give
investors any reason to stop selling the dollar on expectations
the Fed will unleash a second round of QE as early as its Nov.
2-3 meeting []
"It's a very bullish picture for gold," said Carl Firman,
analyst at Virtual Metals.
"You have this prospective QE2, dollar weakness, inflation
fears," he added. "After Christmas we're looking at possibly
$1,400."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on on QE2 impact on gold and dollar:
http://link.reuters.com/kaf27p
Graphic on commodity price performances in 2010:
http://link.reuters.com/baf29p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The fact that the dollar did not fall further after G20
suggested bullion could weaken in the short term due to a
resurgent U.S. currency, said James Dailey, portfolio manager
of the Team Asset Strategy Fund <TEAMX.O>.
Uncertainty about global economic recovery and inflation
worries due to lax monetary policies have prompted an
increasingly number of investors to buy gold, pushing the
yellow metal up 22 percent year to date.
PHYSICAL DEMAND SUPPORTS
Robust physical demand from top gold-consuming country
India ahead of the key Hindu festival of Diwali, a major
gold-buying event, is likely to keep gold prices buoyant.
[]
BlackRock Inc <BLK.N>, the world's largest money manager,
expected gold prices to rise further due to a lack of world
production growth, increasing appetite among central banks to
hold more gold as a safe-haven investment. []
Platinum group metals were lifted by news that the Obama
administration proposed that heavy trucks reduce carbon
emissions by 20 percent by 2018 as part of a first-ever fuel
efficiency standard for commercial vehicles. []
Platinum and palladium are mainly used as autocatalysts to
clean tailpipe exhaust fumes from vehicles. That accounts for
more than half of worldwide demand for the two platinum-group
metals.
Spot palladium <XPD=> rose 3.1 percent to $605, after
hitting a session peak at $615.50, its highest since mid-2001.
Palladium has risen about 50 percent so far this year, nearly
double the rise in gold and three times the pace of platinum's
rise.
Platinum <XPT=> gained 1.4 percent to $1,691.17 an ounce,
while silver <XAG=> traded up 1 percent at $23.46 an ounce.
Prices at 1:06 p.m. EDT (1706 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1335.10 9.80 0.7% 21.8%
US silver <SIZ0> 23.445 0.327 1.4% 39.2%
US platinum <PLF1> 1697.30 22.20 1.3% 15.4%
US palladium <PAZ0> 609.00 17.90 3.0% 49.0%
Gold <XAU=> 1334.59 7.89 0.6% 21.7%
Silver <XAG=> 23.43 0.19 0.8% 39.1%
Platinum <XPT=> 1692.17 24.42 1.5% 15.5%
Palladium <XPD=> 607.05 20.07 3.4% 49.7%
Gold Fix <XAUFIX=> 1337.50 -7.50 -0.6% 21.2%
Silver Fix <XAGFIX=> 23.71 66.00 2.9% 39.6%
Platinum Fix <XPTFIX=> 1702.00 6.00 0.4% 16.1%
Palladium Fix <XPDFIX=> 611.00 4.00 0.7% 52.0%
(Reporting by Frank Tang; Editing by Lisa Shumaker)
