* Gold hammers on door of $1,300/oz after Fed inspires rally
* Silver climbs to 30-year peak on gold's coat-tails
* Dollar weakness set to lead to further gains
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Sept 24 (Reuters) - Gold rallied to record highs in
Europe on Friday, with spot prices knocking on the door of
$1,300 an ounce, as expectations grew that further quantitative
easing could lead to volatility in the currency markets.
Spot gold <XAU=> hit an all-time high of $1,298.25 an ounce
and was bid at $1,297.70 an ounce at 0917 GMT, against $1,293.50
late in New York on Thursday.
U.S. gold futures for December delivery <GCZ0> hit a record
$1,300.00 an ounce and were later at $1,299.10 an ounce, up
$2.80. Silver also reached its strongest in 30 years at $21.40
an ounce, tracking gains in gold.
Gold has risen more than 4 percent so far this month and hit
record highs for five consecutive sessions to Wednesday,
extending gains after the Federal Reserve indicated it may
consider further quantitative easing, undermining the dollar.
"The U.S. Fed is obviously contemplating, and the market is
expecting, some kind of statement on quantitative easing," said
Deutsche Bank analyst Daniel Brebner. "The influx of new money
in the system raises longer term expectations for inflationary
forces"
"If you look at peripheral Europe, you have sovereign risks
which have been increasing for both Ireland and Portugal. There
is a likelihood that there will be some kind of move by the
European Central Bank to resolve that challenge."
"These two things, and the likelihood that the dollar will
continue to erode in value... (mean) there is real potential
that we will see higher prices," he added. "We could see some
significant moves in gold and silver over the next quarter."
Gold priced in Japanese yen <XAUJPY=R> also rose to its
highest since late June at 110,335 yen an ounce after the yen
slipped sharply on talk of a second intervention by Japanese
authorities to stem the currency's gain. []
Against a basket of six currencies, the dollar weakened
however, falling 0.2 percent <.DXY>. Dollar weakness lifts
gold's appeal as an alternative asset and makes dollar-priced
commodities more expensive for holders of other currencies.
SILVER HITS HIGHEST SINCE 1980
From a technical perspective, gold is poised for further
gains after an 18 percent rally so far this year. Reuters'
technical analyst Wang Tao said the metal could reach $1,539 an
ounce by the end of the year, based on technical indicators.
[]]
Silver prices are also well-positioned after breaking
through technical resistance at $21.20 and $21.35 to rally to
their highest since 1980. It was later at $21.34 an ounce
against $21.14.
The metal has seen strong investor interest as gold has
rallied, with holdings of the world's largest silver-backed
exchange-traded fund, the iShares Silver Trust <SLV>, rising to
an all-time high of 9,582.59 tonnes on Thursday. []
"A sizeable factor underlying the current performance of the
precious metals sector as a whole arrives from portfolio
managers who, in an effort to erode less impressive market
returns earlier in the year, are putting money to work in gold,
but also silver, platinum and palladium," said UBS analyst Edel
Tully in a note.
"While gold's investor audience continues to evolve, the
rest of the precious metals have been on the receiving end of
'new' interest over the past two months."
"This goes some way to explain the sizeable increase in
futures positioning across the metals but can also explain the
turnaround in silver ETF demand," she said.
Among other precious metals, platinum <XPT=> was at $1,644
an ounce against $1,638.10, while palladium <XPD=> was at
$554.55 against $550.95.
(Reporting by Jan Harvey; Editing by Alison Birrane)
