PRECIOUS-Gold resumes climb as dollar weakens

                                
 * Gold rises after Fed says will buy $300 bln of debt
                                
 * Traders fear move will prompt dollar weakness, inflation
                                
 * SPDR gold ETF hits fresh record
                                
 
                                
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 By Paul Lauener and Jan Harvey
                                
 LONDON, March 19 (Reuters) - Gold rose to a new two-week
high on Thursday as the dollar resumed its decline, boosting
bullion's appeal as a currency hedge, after the Federal Reserve
unveiled plans to spend $300 million on long-dated Treasuries.
                                
 The move announced on Wednesday means the Fed will
effectively print money, and has damaged the dollar's reputation
as a safe store of value and stoked fears of inflation, sending
investors to gold. [nLJ337842]
                                
 Spot gold <XAU=> rose to a peak of $947.20 an ounce, its
highest since March 2, and was quoted at $944.25/945.75 an ounce
at 1219 GMT, from $895.80 late in New York on Wednesday.
                                
 Mitsubishi precious metals strategist Tom Kendall said the
metal was continuing its climb in response to the Federal
Reserve statement. "The dollar sold off and that's continued
again in London this morning," he said.
                                
 The dollar resumed its downward trajectory on Thursday,
hitting a two-month low against a basket of currencies, after
suffering its biggest daily plunge since 1985 in the previous
session. [ID:nLJ945813]
                                
 Gold traditionally moves in the opposite direction to the
dollar, as it is often bought as an alternative investment to
the U.S. currency.
                                
 A weaker dollar also makes gold cheaper and therefore more
attractive for holders of other currencies.
                                
 Richcomm Global Services said in a research note there are
concerns the Fed move may prompt other central banks to follow
suit, creating a domino effect of weakening currencies and
sending investors to safer investments such as gold.
                                
 Central banks in Britain and Japan have already announced
they would purchase their respective government debt, while the
Swiss National Bank last week said outright it would sell francs
to weaken its currency.
                                
 
                                
RECORD
                                
A rise in gold-backed exchange-traded funds and investment in
gold production also suggested support for gold.
                                
 Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, rose to a record 1,084.33
tonnes by March 18, up 15.28 tonnes or 1.4 percent from the
previous day, the latest figures showed. [GOL/SPDR]
                                
 Inflows into ETFs are offsetting weakness in jewellery
demand. Data showed exports of gold jewellery from Italy,
Europe's top manufacturer, fell 8.3 percent last year to 4.38
billion euros. [ID:nLI967147]
                                
 India gold demand also ebbed on Thursday as traders said
prices were too high. Demand should pick up in mid-April to May
as the wedding season begins. [ID:nBOM429685]
                                
 Among other precious metals, spot silver <XAG=> climbed to
$13.13/13.20 an ounce from $12.88. Holdings of the world's
biggest silver-backed ETF, the iShares Silver Trust, rose 1.3
percent or 101.18 tonnes on Wednesday. [ID:nLJ506233]
                                
 Platinum <XPT=> rose to $1,081.50/1,091.50 an ounce from
$1,057, while palladium <XPD=> firmed to $199/204 an ounce from
$197.
 (Reporting by Paul Lauener; editing by Keiron Henderson and
Anthony Barker)