* Traders await ECB interest rate decision
* Goldman Sachs ups 3-mth gold price forecast to $1,000/oz
* Aquarius Platinum cuts 2009 output forecast by 100,000/oz
(Updates with Bank of England rates decision)
By Jan Harvey
LONDON, Feb 5 (Reuters) - Gold rose in Europe on Thursday,
supported by interest in the metal as a haven from risk and a
softer dollar, with traders awaiting the European Central Bank's
interest rate decision later in the session.
The metal rose to a session high of $918.50 after the Bank
of England opted to cut its rates by 50 basis points as
expected. []
Spot gold <XAU=> was quoted at $917.10/919.10 an ounce at
1207 GMT, up from $904.70 in New York late on Wednesday.
"The dollar gave up some of its gains this morning," VTB
Capital analyst Andrey Kryuchenkov said. "Everyone is waiting to
see what will happen with the ECB rate decision." He said gold
had "good potential" to break higher.
The euro edged up against the dollar in nervous trade as
investors stayed on the sidelines ahead of the ECB's rate
decision at 1245 GMT. []
The bank is widely expected to keep rates on hold after four
months of cuts, but the markets are looking for signs of further
steps it may take to shore up the euro zone economy.
[]
Interest in gold as a safe store of value also fuelled
buying among risk-averse investors.
Interest in physical bullion in the form of coins and bars
and investment products such as gold-backed exchange-traded
funds has soared as fears over the outlook for the global
economy has made asset prices volatile.
Investors also fear the large amount of government debt
poured into the banking sector will fuel inflation.
"The fact that gold as an asset class has more trust in it
than a lot of other financial products out there at the moment
means people are continuing to push money in there," said
Commerzbank trader Rory McVeigh.
"There has been steady buying of small investment-type
physical gold, particularly in Europe, and exchange-traded
funds."
The world's largest bullion-backed ETF, New York's SPDR Gold
Trust <GLD>, said its holdings hit another record on Wednesday,
rising to 859.49 tonnes. []
SAFE
Goldman Sachs lifted its three-month gold forecast to $1,000
an ounce from $700 an ounce, citing safe-haven demand for gold.
[]
"The gold price rally has been driven by surging demand for
gold in all forms: physical gold, exchange traded funds and
futures contracts and investors seek a 'safe store of value',"
the bank said in a note.
"It is also important to emphasise that the recent strong
demand for gold has not been irrational, but rather pretty much
in line with the probabilities of financial and sovereign
default."
Silver <XAG=> climbed to $12.83/12.91 an ounce against
$12.51 late in New York on Wednesday.
Platinum <XPT=> was quoted at $979.50/984.50 an ounce
against $964.
Aquarius Platinum <AQP.L>, the world's fourth-largest
producer of the white metal, cut its 2009 production target by
100,000 ounces to 475,000 ounces, and said its output fell 6
percent in 2008 from the year before. []
"News of platinum producers struggling with costs and
production may help platinum prices move higher, although
continuing negative news on auto sales may hold prices back,"
Fairfax analyst John Meyer said.
Palladium <XPD=> meanwhile firmed nearly 4 percent to
$201/206 an ounce from $194, driven by buying for
palladium-backed ETFs, dealers said.
(Editing by Sue Thomas)
