* Bullion reaches highest level since July 2008
* U.S. bank rescue plan disappoints
* SPDR ETF holdings rise to fresh record
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 11 (Reuters) - Gold jumped 3 percent to a 6-1/2
month high on Wednesday as risk aversion prompted investors to
buy gold and bullion-backed exchange-traded funds as a haven.
Prices pushed through tough resistance just above $930 to
reach a peak of $944.30.
At 1528 GMT spot gold <XAU=> was quoted at $944.20/946.20 an
ounce, against $914.15 late on Tuesday. U.S. gold futures for
April <GCJ9> delivery on the COMEX division of the New York
Mercantile Exchange rose $29.10 to $942.80 an ounce.
Prices have moved upwards throughout the day as investors
digested details of a bank bail-out plan announced in the U.S.
on Tuesday.
"There was a lot of disappointment behind the package,
either because the measures weren't concrete enough or because
they thought they hadn't tackled the root cause of the problem,"
said BNP Paribas analyst Michael Widmer.
"A lot of investors reassessed the risk in the market, and
as risk aversion increased, it helped prices."
The United States on Tuesday rolled out a revamped bank
rescue plan that may cost more than $2 trillion. Stocks slid by
the most in two months after the plan was unveiled, while gold
climbed 2 percent as investors sought safety. []
CMC Markets strategist Ashraf Laidi said doubts about the
U.S. plan to shore up banks and the economy had led to fears of
an escalation of debt issuance.
"This combination of further debt escalation with a lack of
any economic result is further fortifying gold's ascent," he
said.
Physical gold and bullion-backed ETFs have increased in
popularity in recent months as risk aversion has increased.
Holdings of the world's largest bullion-backed ETF, the SPDR
Gold Trust <GLD>, rose to a record 894.72 tonnes on Feb. 10, up
12.85 tonnes from the previous day.
Gold's main external driver, the dollar, weakened against
the euro as traders locked in profits made in the previous
session. []
A softer dollar typically benefits gold, which is often
bought as a hedge against weakness in the U.S. currency.
Among other assets, U.S. stocks opened higher as investors
hunted bargains following a sell-off sparked by the U.S. bank
plan. European shares slipped, however. []
Oil prices pared gains to hold below $38 a barrel after the
International Energy Agency said fuel demand would contract more
sharply than previously thought. []
UPBEAT
Africa's top gold producers were upbeat on gold's outlook at
this week's annual African mining conference. Experts say the
metal could rise above $1,000 an ounce this year. []
But the world's number 4 gold producer, Gold Fields
<GFIJ.J>, plans to cut as much as 10 percent of its workforce
through voluntary layoffs, a union official said. []
Silver <XAG=> rose to $13.60/13.66 an ounce from $13.10.
The metal has also benefited from ETF inflows. Holdings of
the largest silver-backed ETF, the iShares Silver Trust <SLV>,
rose 1 percent to a record 7,606.89 tonnes on Monday.
Among other precious metals, platinum <XPT=> extended
Tuesday's gains to $1,062.50/1,067.50 an ounce from $1,032,
while palladium <XPD=> was up at $213/218 an ounce from $210.
Platinum has risen 6 percent since early Tuesday on the back
of hopes there may be light at the end of the tunnel for the
global economy, and as miners reported operational cutbacks.
(Editing by James Jukwey)
