* Concern over European bank sector weighs on risk appetite
* Gold eyes record as haven buying, seasonality converge
* Silver climbs to fresh 2-1/2 yr high
(Updates prices, adds background)
By Amanda Cooper
LONDON, Sept 8 (Reuters) - Gold rose for a third day on
Wednesday to within reach of another record high and silver hit
a 2-1/2 year peak as the waves of nervousness over the global
economy steered investors into perceived safe-haven assets.
Spot gold <XAU=> was bid at $1,260.50 an ounce at 1212 GMT
GMT, against $1,253.10 late in New York on Tuesday. U.S. gold
futures for December delivery <GCZ0> rose $3.10 to $1,262.40.
Silver <XAG=> reached a session high of $20.07 an ounce and
was bid at $20.05 an ounce against $19.83.
Gold has risen by about 15 percent so far in 2010, marking
ten years of continuous increases, and looks set for its third
all-time high this year. It last hit a record $1,264.90 in June.
The rally has been driven in large part by the emergence of
the difficulties of several euro zone member states in covering
the spiralling cost of financing their debt burdens as the
regional economy sputtered.
Evidence of cracks in the U.S economic recovery and cooler
Chinese data, combined with doubt about the strenuousness of
stress tests conducted on European banks has created a
springboard for investors to dive into gold.
"It's a perfect storm, which will now take us up to
challenge the all-time high and maybe even make new highs," said
Credit Agricole analyst Robin Bhar.
"All the factors seem to have come together at a time when
physical demand is also propping up the market, but as with all
the other precious metals, physical demand is probably not going
to be the factor trhat drives it to new highs. It has to be this
investment desire."
With the resilience of the U.S. recovery in question and the
premium investors demand in exchange for the risk of holding the
sovereign debt of certain euro zone members returning to the
record peaks seen in early May, gold is now less than 1 percent
shy of the late June high.
STALLING
The metal has hit tough resistance just below its all-time
high, but analysts say they are confident in the metal's rise.
"It seems to be benefiting from equity weakness, the renewed
euro zone sovereign debt jitters and possibly concerns about new
U.S. spending measures," said Citigroup analyst David Thurtell.
UBS precious metals strategist Edel Tully said she had
upgraded her gold price forecasts based on gold's traditional
outperformance in September, coupled with safe-haven demand
emanating from the focus on sovereign fiscal burdens.
"Given the range of factors conspiring to push gold higher
in September, we raise our one-month forecast to $1,300, from
$1,230 previously. We also lift our three-month target to
$1,300, from $1,200 previously," she wrote in a report.
Also supporting prices was news that China, the world's
biggest gold miner, saw a fall in output in July. The country is
a major consumer of gold, and speculation its output may fail to
satisfy domestic demand is likely to firmly underpin prices.
[]
On the wider markets, currency trading pointed to a
resurgence in risk aversion.
The yen struck a fresh 15-year high against the dollar and
the Swiss franc an all-time peak versus the euro on Wednesday as
a flare-up in worries over euro zone banks and sovereign debt
led investors into safe havens. []
European stocks rebounded, recovering earlier losses, while
U.S. stock futures pointed to a higher opening on Wall Street.
Trade was cautious, however, ahead of comments from the Federal
Reserve later on the economy. []
Elsewhere platinum <XPT=> was at $1,556.63 an ounce against
$1,553.03, and palladium <XPD=> was at $523.75 against $520.85.
(Additional reporting by Jan Harvey; editing by Keiron
Henderson)
