* Dollar index hits year-low, euro-dollar touches 2009 high
* Rising prices hurt physical gold demand, fuel scrap sales
* Silver, platinum hit multi-month highs, tracking gold
(Updates prices, adds background)
By Jan Harvey
LONDON, Sept 11 (Reuters) - Gold prices extended gains above
$1,010 an ounce in Europe on Friday as the dollar index's <.DXY>
tumble to one-year lows fuelled interest in the precious metal
as an alternative asset.
Its gains lifted prices of other precious metals, with
silver and platinum both rallying to multi-month highs in its
wake.
Spot gold <XAU=> rose to a high of $1,011.55 an ounce, its
firmest since February 2008, and was bid at $1,009.50 an ounce
at 1437 GMT against $995.50 late in New York on Thursday.
Citigroup analyst David Thurtell said the dollar was
providing most support to gold. "The dollar seems like it could
be heading for $1.50 against the euro. There are bound to be
people seeking currency hedges, and gold's a good one," he said.
Nonetheless, gold's inability to hold above the $1,000 an
ounce level in previous runs higher was likely to encourage
profit taking at these levels, he said, while an increase in
scrap supply to the market could also prove a drag on prices.
The dollar hit a one-year low against a currency basket
<.DXY> after stronger-than-expected Chinese data. Recovery hopes
are fuelling interest in currencies seen as higher risk. []
The euro <EUR=> reached its highest level this year above
$1.46 against the U.S. currency. A decline in the dollar could
precipitate substantial gains in gold, analysts said.
"Currency movements will be the principal driver for gold,
and the impact of the U.S. dollar seems to have regained its
prominence, despite a number of potential obstacles," Standard
Chartered said in a note.
"With the U.S. dollar likely to weaken further, gold should
average $1,050 an ounce in Q4."
OIL RISES
A rise in oil prices after rockets were fired from Lebanon
into northern Israel also helped to lift gold, traders said.
Crude climbed back above $72 an ounce after the news, though it
later cut gains as U.S. equities fell. [] []
On the wider markets, equities rose in Europe, while Wall
Street stocks turned lower after rising at the open. [] []
Physical demand for gold was lacklustre as prices rose,
traders said. The largest gold exchange-traded fund, the SPDR
Gold Trust <GLD>, said its holdings were unchanged on Thursday
for a sixth day. []
Buyers of physical gold are waiting to see if the precious
metal's recent price rise is sustainable before purchasing the
metal. Consumer buying in key markets such as India, Turkey and
the Middle East has been slack this year as prices rose.
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange rose $14.80 to
$1,011.60 an ounce.
Among other precious metals, silver <XAG=> hit its highest
since early August 2008 at $16.97, tracking a rise in gold. It
was later at $16.89 an ounce against $16.68 an ounce.
Though silver is an investment metal like gold, it is also
widely used in industry, especially electronics manufacturing,
and often tracks moves in base metals such as copper and nickel.
Platinum <XPT=> also rallied more than 2 percent to a high
of $1,314 an ounce against $1,284. Palladium <XPD=> was at $295
against $288.50.
ETF Securities' London palladium ETF holdings edged up just
over 1,000 ounces on Thursday to a record 478,952 ounces.
(Editing by Sue Thomas and Andy Bruce)
