(Updates with quotes, record high gold price)
By Atul Prakash
LONDON, Feb 28 (Reuters) - Gold raced higher to an historic
high above $965 an ounce on Thursday as the dollar's slump to
record lows and strong oil prices boosted investor buying,
analysts said.
Silver hit a 27-year peak above $19.75 an ounce, palladium
hit a 6-1/2-year high and platinum bounced back after falling
more than 2 percent to a one-week low.
Spot gold <XAU=> rose as high as $966.70 an ounce and was at
$966.00/966.90 at 1614 GMT, against $957.50/958.30 late in New
York on Wednesday.
"Gold is pretty much tracking the euro/dollar moves and
funds and investors will keep buying the metal until it gets to
$1,000 an ounce," said David Thurtell, analyst at BNP Paribas.
"Markets for equities, property and corporate bonds are very
poor. Cash will earn you less and less in interest. Investing in
gold is an obvious choice when other asset classes are not doing
that well," he said.
The dollar fell to a record low versus the euro as weak U.S.
economic data fuelled recession fears and raised expectations
that Federal Reserve will cut interest rates again.
U.S. fourth quarter gross domestic product was revised lower
and surprisingly big jump in initial weekly jobless claims added
to concern about the economy and increased the likelihood of
rate cuts. For details, see [] and [].
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil rose towards $102 a barrel, trading within sight of its
record high, as the U.S. dollar sank to a new low and after a
supply cut in Nigeria, Africa's top exporter.
"Gold should remain pretty well supported. If the dollar
weakens further, then definitely we will see an acceleration in
the upside trend. We see a range between $950 and $1,000." said
Frederic Panizzutti, precious metals analyst at MKS Finance.
Gold has gained around 16 percent this year on investor
demand driven by record high oil prices and the possibility of
more interest rate cuts, which has raised the metal's appeal as
an alternative investment.
PHYSICAL MARKET
In the physical sector, selling from retail investors in
Japan slowed down on expectations there was room for gold to
rise further, while dealers in Singapore noted light selling
from jewellers in Indonesia and Thailand.
Gold bars were offered at a discount of 25 U.S. cents an
ounce to the spot London prices in Tokyo.
In other metals, platinum <XPT=> was last at $2,135/2,140 an
ounce after falling as low as $2,084, against $2,130/2,140 in
New York. It hit a record of $2,192 on Feb. 22 as persistent
power supply problems disrupted mining in South Africa, the
world's top producer.
"We continue to believe that prices will trend higher into
the second quarter, but should soften in the second half of this
year," Standard Chartered Bank said in a report.
"Some of the short-term problems in South Africa should be
overcome by then, and consumption is likely to be dented by
higher prices in some sectors such as jewellery. Despite this,
platinum is expected to remain fundamentally tight and prices
should trend higher once more heading into 2009."
In market news, Zurich Cantonal Bank said its palladium
exchange traded fund attracted much more money than expected,
and its platinum fund was catching up as investors bet on even
higher prices. []
Silver <XAG=> rose as high as $19.77 an ounce and was last
at $19.71/19.76, versus $19.22/19.27 on Wednesday. Palladium
<XPD=> hit a high of $560/564 an ounce, up from $550/555.
(Additional reporting by Lewa Pardomuan in Singapore)
(Reporting by Atul Prakash; editing by Chris Johnson)
