* Fund buying, physical demand, technicals boost bullion
* Euro-priced bullion hits record as single currency slips
* Palladium at 2-year highs, platinum firmest since 2008
* Coming up: U.S. weekly jobless claims on Thursday
(Recasts, adds comments, updates prices to market close)
By Frank Tang
NEW YORK, April 7 (Reuters) - Gold rose to its highest
level in nearly three months on Wednesday, defying a stronger
dollar, as a combination of fund buying, physical demand and
technical support lifted the metal above $1,150 an ounce.
Other precious metals also took the lead from gold, with
silver climbing to its firmest since January, while palladium
and platinum also jumped to their highest since 2008.
Bullion's gains in the face of a stronger greenback
indicate that the negative correlation between the metal and
the dollar has lessened as economic uncertainties prompted
risk-averse investors pile into gold as a safe haven.
A stronger greenback usually makes dollar-denominated gold
more expensive to non-U.S. investors, and the metal is also
seen as an alternative global currency to the U.S. dollar.
Adam Klopfenstein, senior market strategist at
Lind-Waldock, said a successful $21 billion auction of 10-year
U.S. Treasury notes boosted expectations of lower interest
rates. []
Gold could keep rising despite the dollar's strength, he
added.
"People want to own commodities and things that are priced
in U.S. dollars, because the microscope is now on how the U.S.
economic data-points fare better than the euro-zone's."
Spot gold <XAU=> peaked at $1,152.75 an ounce, its highest
since mid-January, and was at $1,149.55 an ounce at 2:37 p.m.
EDT (1837 GMT), against $1,133.20 late in New York on Tuesday.
The euro hit its lowest in more than a week against the
dollar on renewed concerns over Greece's ability to tackle its
debt crisis. []
"The dollar is not the sole determinant of gold prices --
it's just a very influential one. This denotes strong
underlying strength in the gold market, and it indicates that
other factors in the market are very strong," said James Steel,
chief commodities analyst at HSBC.
Steel said that the inverse relationship between gold and
the dollar will assert itself in the long run, even though the
two could be out of sync for weeks or even months.
Traders report Indian jewelers are stocking up for the
wedding season in the world's largest gold consumer. []
Euro-priced gold <XAUEUR=R> hit a record high of 863.29
euros an ounce, and was last at 862.48 euros against 846.04
euros late on Tuesday.
CitiFX strategists said in a note that gold's Tuesday close
above its short-term reverse head-and-shoulder neckline at
$1,133 suggests that the metal is currently targeting $1,242 an
ounce, above its current all-time at $1,126.10 on Dec. 3.
U.S. June gold futures <GCM0> settled up $17, or 1.5
percent, at $1,153 an ounce on the COMEX division of the
NYMEX.
LOW INTEREST RATES HELP
Gold prices are also being supported by expectations
interest rates will remain low for an extended period, which
will keep the opportunity cost of holding gold low.
Minutes from the U.S. Federal Reserve's last meeting
suggested the Fed could keep interest rates ultra-low for even
longer than investors expect if the economic outlook worsens or
inflation drops. []
Among other commodities, platinum group metals benefited
from expectations for an economic recovery, with dealers
reporting good demand for palladium in particular from Japanese
car makers.
Platinum <XPT=> hit its highest since August 2008 at $1,723
an ounce and was last at $1,701 an ounce against $1,697.50 on
Tuesday. Palladium <XPD=> hit a two-year high at $511.50 and
was at $506 against $504.50 previously.
Silver <XAG=> was at $18.18 an ounce versus $17.88, having
hit $18.23, its highest since late January.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1153.00 17 1.5 1096.20 5.2
US silver <SIK0> 18.199 0.268 1.5 16.845 8.0
US platinum <PLN0> 1723.20 18.70 1.1 1471.00 17.1
US palladium <PAM0> 512.35 3.85 0.8 408.85 25.3
Prices at 3:00 p.m. EDT (1859 GMT)
Gold <XAU=> 1149.15 15.95 1.4 1096.35 4.8
Silver <XAG=> 18.15 0.27 1.5 16.84 7.8
Platinum <XPT=> 1701.50 4.00 0.2 1465.50 16.1
Palladium <XPD=> 506.00 1.500 0.3 405.50 24.8
Gold Fix <XAUFIX=> 1142.00 8.75 0.8 1104 3.4
Silver Fix <XAGFIX=> 17.97 5.00 0.3 16.99 5.8
Platinum Fix <XPTFIX=> 1710.00 2.00 0.1 1466 16.6
Palladium Fix<XPDFIX=> 508.00 1.00 0.2 402 26.4
(Additional reporting by Jan Harvey and Rebekah Curtis in
London; Editing by Marguerita Choy)
