* Gold nears July high of $988, shoots for record
* SPDR Gold ETF, iShares Silver ETF hit records
* World Gold Council says 2008 gold demand rises 4 pct
(Recasts, updates prices, market activity, comments; new
byline, dateline, previously LONDON)
By Carole Vaporean
NEW YORK, Feb 18 (Reuters) - Gold rose late on Wednesday to
the highest price since last July, as risk-averse investors
sought a safe, tangible asset in a global recession.
Trading remained active late in the session, driving spot
gold <XAU=> to $984.65 an ounce by 3:56 p.m. EST (2056 GMT). It
moved off the seven-month high to trade at $983.35/985.35,
still well above $968.35 late on Tuesday.
U.S. gold futures for April delivery <GCJ9> closed up
$10.80, or 1.12 percent, at $978.30 an ounce on the COMEX
division of the New York Mercantile Exchange.
The contract also shot to a new seven-month high at $988.70
per ounce in after-hours dealings.
Traders cited vigorous safe-haven demand. Barclay's Capital
technical strategist MacNeil Curry said he sees spot gold
heading for the July 2008 high of $988 per ounce on its way to
the record high.
"The bigger level has been breached, when we took out $931.
That completed the choppy down trend, range trade. Now, $988
will be a hurdle, because that was the last pivot high, ahead
of the all-time high. That's going to go and I think we're
going to see a push to new all-time highs," said Curry.
Gold hit new highs in a raft of currencies as investors
bought gold and bullion-backed exchange-traded funds as a safe
store of value.
"The unprecedented fragility of confidence is forcing
investors back into safe havens, with gold the top
beneficiary," said Gary Dugan, chief investment officer for
Merrill Lynch Global Wealth Management.
"Distressed financial sectors highlight the merit of
precious metals as a secure store of value, while overly
successful monetisation of debt threatens sharply higher
inflation down the line," he added.
Gold has benefitted from long-term inflation worries, as
many countries print money to stimulate sluggish economies,
analysts said.
A World Gold Council (WGC) report released on Wednesday
showed gold demand rose sharply in late 2008, and ETF data show
that trend has continued into 2009.
The World Gold Council's year-end report showed global 2008
gold demand gained 4 pct to 3,569 tonnes as investment buying
outpaced jewelry demand. [] Identifiable
investment demand for products such as ETFs, bars and coins,
rose 64 percent in 2008 from 2007, it said in a statement.
WGC investment research manager Rozanna Wozniak said fear
lay behind the rise in investment.
"People are worried about their assets, worried about their
savings, and scared about the banking system, and they are
looking for protection," she told Reuters.
DOUBLED
Demand for gold ETFs doubled in the second half of 2008
from the first to 244.7 tonnes, the WGC said. []
Holdings of the SDPR Gold Trust have surged by more than
228 tonnes in 2009 to date. The trust's reserves jumped to a
record 1,008.8 tonnes on Feb. 17. []
Lee Hardman, analyst at the Bank of Japan-Mitsubishi said
gold's appeal has been enhanced by the increasing likelihood
that major central banks will turn to quantitative easing.
"It is no coincidence that the start of the recent rally in
gold coincided with the Fed's formal acknowledgement of the
adoption of quantitative easing on the 17 December," he said.
Among other precious metals, silver rallied to a six-month
high of $14.37 an ounce as it tracked gains in gold.
The world's largest silver ETF, the iShares Silver Trust
<SLV> said its holdings rose 51.25 tonnes to a record 7,659.04
tonnes on February 17. []
"There has been some substitution of gold for silver, as
gold prices are relatively high," said BNP Paribas metals
analyst Michael Widmer.
In late business, silver <XAG=> was up at $14.31/14.39 an
ounce from $14.10 previously, platinum <XPT=> was at
$1,097.50/1,102.50 an ounce from $1,088, and palladium <XPD=>
increased to $217.0/222.0 an ounce from $216.50 an ounce.
(Reporting by Carole Vaporean; Editing by David Gregorio)
