* Dollar weakness persists, boosting fund interest in gold
* SPDR gold ETF reports fourth successive daily inflow
* Silver, palladium hit multi-month peaks
(Releads, updates prices, adds detail)
By Jan Harvey
LONDON, Oct 8 (Reuters) - Gold prices held near $1,050 an
ounce in Europe on Thursday, consolidating after hitting a
record $1,058.20 an ounce earlier in the session, but
underpinned by persistent weakness in the dollar.
Gold's gains lifted other precious metals, with silver
reaching its strongest level since July 2008 and palladium
hitting a 13-month peak.
Spot gold <XAU=> was at $1,049.25 an ounce at 1444 GMT
against $1,043.70 late in New York on Wednesday.
A brief retreat in oil prices to below $70 a barrel in early
afternoon trade helped take some upward momentum away from gold,
but dealers said the metal's gains looked solid as the dollar
continued to languish. Oil later recovered. []
"The market is nervous," said Afshin Nabavi, head of trading
at MKS Finance. "Any big transaction seems to take the market
with it momentarily. But overall, it is looking firm."
Dollar weakness is still supporting gold. A softer U.S.
currency makes the dollar-priced metal cheaper for holders of
other currencies, and boosts its appeal as an alternative asset.
The euro <EUR=> rose against the U.S. unit, with investors
disappointed European Central Bank president Jean-Claude Trichet
did not make a more forceful statement on the need for a strong
dollar at a presentation after the ECB decision to keep rates on
hold. []
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange rose $6.00 to
$1,050.40 an ounce.
From a technical perspective, gold is well-placed for
further gains after ending two sessions above its previous
record high just above $1,030 an ounce, analysts said.
Technical analysts at Barclays Capital said their outlook on
gold was bullish, with a push towards $1,120 now on the cards.
"However, we also note previous September breakouts in 2005
and 2007, when gold appreciated by 55-60 percent," they added.
"As such, we would not underestimate the upside potential, and
ultimately expect a push beyond $1,200 in 2010."
ETFS SEE INFLOWS
Demand for gold-backed exchange-traded funds edged up after
waning over the summer months, with the largest, New York's SPDR
Gold Trust <GLD>, reporting a fourth straight day of inflows on
Tuesday. []
Investors in the fund bought nearly 14 tonnes of gold,
lifting its holdings 1.3 percent, in the week to Tuesday.
Among other precious metals, silver hit a 14-month high,
lifted by gold's gains and also, as an industrial metal,
benefiting from optimism over the global economic outlook.
Spot silver <XAG=> was at $17.69 an ounce against $17.55,
having earlier touched a high of $17.89 an ounce.
Platinum and palladium, primarily used in autocatalyst
production, also rose in gold's wake. Platinum <XPT=> was at
$1,334 an ounce against $1,326, while palladium <XPD=> was at
$315.50 against $311. Earlier it hit a 13-month high of $318.50.
Mitsubishi Corp precious metals strategist Tom Kendall said
palladium had had a tendency to track gold in recent days.
Earlier this year the platinum/palladium price ratio reached
5.5:1, indicating that platinum was significantly overvalued
relative to its cheaper sister metal, he said. Since then the
ratio has narrowed to 4.2:1 today.
Kendall said this was partly due to expectations carmakers
will push to substitute platinum for palladium in autocatalysts.
"That trend has been going on for some time and will
continue for a while longer yet," he said. "Ultimately that is
what drives the ratio."
"But other factors are as important over a shorter time
frame I think, (such as) whether the Russia state has any
palladium left in stocks, and if so, whether it will sell it."
(Reporting by Jan Harvey; Editing by Keiron Henderson)
