* Gold ends above $1,000 for first time since March 2008
* Dollar index hits near one-year low, euro at 2009 high
* Short-term pullback possible after rally
(Recasts, updates with prices, market activity, changes
byline, dateline, pvs London)
By Frank Tang
NEW YORK, Sept 11 (Reuters) - Gold jumped 1 percent on
Friday, closing above $1,000 an ounce for the first time since
March 2008 as a slumping dollar and inflation fears stirred
investment demand for bullion.
Gold's breakout lifted prices of other precious metals,
with silver and platinum both rallying to multi-month highs.
Analysts a surge in demand for gold by funds and
institutions switching out of cash and equities powered the
precious metal's rally. The stock market appeared ripe for
profit taking after soaring from its March lows.
"People are nervous about the decline in the U.S. dollar.
They are also nervous about the potential fall in the stock
market, so people are buying gold as a hedge against that,"
said William Rhind, head of sales and marketing for the U.S.
division of ETF Securities, which operates 130 exchange-traded
products.
U.S. December gold futures <GCZ9> settled up $9.60, or 1
percent, at $1,006.40 an ounce on the COMEX division of the New
York Mercantile Exchange. The session high was $1,013.70, the
highest price since Feb. 20.
Spot gold <XAU=> at $1,005.70 an ounce at 3:54 p.m. EDT
(1954 GMT), against $995.50 late in New York on Thursday.
Bullion's all-time high was at $1,030.80 set on March 17,
2008.
Citigroup analyst David Thurtell said the dollar was
providing the 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.
The dollar hit a near one-year low against a currency
basket <.DXY> after stronger-than-expected Chinese data, as
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.
Nonetheless, gold's inability to hold above $1,000 an ounce
in previous rallies could drag the market, along with an
increase in scrap supply to the market, Thurtell said.
The price of gold failed to close above $1,000 an ounce
when it last broached that level in February 2009. It also
failed to sustain that level for long in March 2008, the last
time it closed above $1,000.
SHORT-TERM VULNERABILITY?
Gold could be vulnerable to a near-term pullback said
Jeffrey Christian, managing director of CPM Group, noting that
individuals have not joined funds and institutions in the
buying spree.
Physical demand for gold was subdued 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. []
Consumer buying in key markets such as India, Turkey and
the Middle East has been slack this year as prices rose.
Among other precious metals, silver <XAG=> hit its highest
level since early August 2008 at $16.97, tracking a rise in
gold. It was later at $16.77 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 $1,316.50 an ounce against $1,284. Palladium <XPD=> was at
$290 against its previous finish of $288.50.
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 1006.40 9.60 1.0 884.30 13.8
US silver <SIZ9> 16.700 0.030 0.2 11.295 47.9
US platinum <PLV9> 1320.70 31.00 2.4 941.50 40.3
US palladium <PAZ9> 294.50 1.05 0.4 188.70 56.1
Prices at 3:54 p.m. EDT (1954 GMT)
Gold <XAU=> 1005.65 10.15 1.0 878.200 14.5
Silver <XAG=> 16.76 0.08 0.5 11.30 48.3
Platinum <XPT=> 1316.00 32.00 2.5 924.50 42.3
Palladium <XPD=> 290.00 1.50 0.5 184.50 57.2
Gold Fix <XAUFIX=> 1008.25 17.50 1.8 836.50 20.5
Silver Fix <XAGFIX=> 16.890 0.800 5.0 14.760 14.4
Platinum Fix <XPTFIX=> 1292.00 0.00 0.0 1529.00 -15.5
Palladium Fix <XPDFIX=> 292.00 0.00 0.0 365.00 -20.0
(Reporting by Frank Tang and Jan Harvey; Editing by David
Gregorio)
