* Price resilience after Friday's dip cheers investors
* SPDR gold ETF holdings rise more than 2 tonnes
(Updates prices, adds background)
By Jan Harvey
LONDON, Dec 1 (Reuters) - Gold hit record highs near $1,200
an ounce on Tuesday as dollar weakness fuelled buying of the
metal as an alternative asset, while investors speculating on
more gains were cheered by recovery from last week's setback.
Spot gold <XAU=> hit a peak of $1,198.70 an ounce and was
bid at $1,190.20 an ounce at 1315 GMT, against $1,179.10 late in
New York on Monday.
"The fact that we are seeing the dollar weaken is helping to
drive gold," said Ole Hansen, senior manager at Saxo Bank.
He said investors had been encouraged by the strength of
gold's recovery after it fell to below $1,140 an ounce last
week, with the fall being met with strong fund buying.
"Everyone was waiting for that correction, and the way gold
recovered suggested there was a lot of buying lurking in the
wings (among) people who missed the opportunity to get into the
market in the first place," said Hansen.
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange also hit a record
$1,200.50 an ounce and were later up $9.40 at $1,191.70.
The dollar index <.DXY>, which tracks the U.S. currency's
performance against a basket of six others, fell on Tuesday as
more clarity about Dubai's debt situation eased some concerns
over the region's stability, lifting risk appetite. []
The dollar also pared gains against the yen after comments
from the Bank of Japan on monetary policy.
Weakness in the U.S. unit boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
Other commodity prices also firmed on the back of the weaker
dollar, with base metals firming and oil rising more than half a
percent to nearly $78 a barrel. [] []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
BARRICK COMPLETES DEHEDGING
Elsewhere the world's biggest gold miner, Barrick Gold Corp
<ABX.TO>, said on Tuesday it has completed the elimination of
all of its gold hedges as planned. De-hedging has represented a
significant source of demand in recent years. []
During times of weak prices, gold miners often sell a
portion of their future production to protect, or hedge, against
the possibility that prices will fall.
When prices rise, as they have done since 2001, the company
suffers because the value of the future production it has sold
does not increase with the gold price.
In the physical market, the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, said its
holdings rose 2.134 tonnes to 1,129.994 tonnes as of Nov. 30.
[]
Indian gold offtake abated on Tuesday as prices resumed
their upward trend, after a modest pick-up in recent sessions
when traders stocked up ahead of wedding demand. []
Sales of scrap persisted in other parts of Asia on Tuesday,
cutting premiums, dealers said. []
Analysts say they expect the gold market to continue taking
support from fund and other investment demand, and further
buying from central banks.
News in early November that India's central bank had bought
200 tonnes of gold, followed by acquisitions by Russia, Sri
Lanka and Mauritius, sparked a 13 percent price rise that month.
"We expect to see further announcements of Central Bank gold
purchases over the coming months as these banks realign their
U.S. dollar and other asset holdings," said Fairfax analyst John
Meyer in a note.
On the supply side, Harmony Gold Mining Co. <HARJ.J>, the
world's No. 5 gold miner, said output was suspended at a South
African shaft on Tuesday after a fatality. []
Among other precious metals, spot silver <XAG=> was bid at
$18.64 an ounce against $18.45.
Platinum <XPT=> was at $1,465.50 an ounce against $1,452,
while palladium <XPD=> was at $376.50 against $363.50, having
earlier touched a high of $379 an ounce, its firmest since
August 2008.
(Editing by Keiron Henderson)
