* Gold hits record as traders expect dollar weakness
* SPDR Gold holdings up for second day
* Gold hits highs in euro, sterling terms
(Releads, adds comment, changes dataline from TOKYO)
By Jan Harvey
LONDON, Dec 2 (Reuters) - Gold hit record highs at $1,216.75
an ounce in Europe on Wednesday as investors bet on higher
prices, with funds lengthening positions due to expectations for
a fresh leg of dollar weakness and more central bank buying.
The metal also reached all-time highs in euro and sterling
terms, according to Reuters data, indicating independent gold
strength.
Spot gold <XAU=> was bid at $1,213.20 an ounce at 0947 GMT,
against $1,196.00 late in New York on Tuesday.
U.S. gold futures also hit a record at $1,218.40 an ounce.
Gold for December delivery <GCZ9> on the COMEX division of the
New York Mercantile Exchange was later up $14.40 at $1,214.60.
The dollar edged up slightly against the euro <EUR=> on
Wednesday, but analysts say with U.S. interest rates likely to
remain depressed and risk appetite improving, the U.S. currency
is set for further losses. []
"Investors are sailing out of the safe havens into more
risky assets, and this is weakening the U.S. dollar," said Peter
Fertig, a consultant at Quantitative Commodity Research.
"The fact that stock markets are performing better and we
have weakness in the U.S. dollar are supportive for precious
metals, and from that perspective I believe this rally remains
sustainable."
Investment interest in gold remained firm, with the world's
largest gold-backed exchange-traded fund, the SPDR Gold Trust
<GLD>, saying its holdings rose 0.61 tonnes or 0.05 percent to
1,130.604 tonnes on Tuesday. []
The holdings are approaching a record marked in June of
1,134.03 tonnes.
Gold also hit record highs in sterling <XAUGBP=R> terms and
when priced in the euro <XAUEUR=R>. For a graphic of gold's
performance in other currencies, click on:
http://graphics.thomsonreuters.com/129/GLD_CURR1209.gif.
Traders are looking ahead to key U.S. data due later in the
week for its influence on currencies and the wider markets.
"The market is focusing on Friday's non-farm payroll and
other data from the U.S. and any good news from the Middle
East...and then of course the U.S. dollar," Ronald Leung,
director of Hong Kong's Lee Cheong Gold Dealers, said.
CENBANK BUYING SEEN
Demand is buoyed by persistent hopes for central banks to
diversify reserves, particularly China, after a report that
India could buy more of the gold being sold by the International
Monetary Fund.
After India's first purchase of 200 tonnes in November,
central banks in Mauritius, Russia and Sri Lanka also bought
gold. For Asian central banks' views on gold, click on
[]
The world's biggest gold miner, Barrick Gold Corp <ABX.TO>,
said on Tuesday it had completed the elimination of all of its
gold hedge-selling positions as planned. []
De-hedging has represented a significant source of demand in
recent years.
The rate at which gold miners cut their hedging positions
rose to 3.18 million ounces in the third quarter, up from
980,000 oz in the second, driven by Barrick's decision to
eliminate its entire hedge book, Societe Generale and metals
consultancy GFMS Ltd said in a quarterly report. []
The sharp reduction left the global gold hedge book at 11.55
million ounces, the report said, adding there had not been
strong signs of a return to outright hedging to lock in
historically high prices.
Strength in gold has lifted other precious metals, with
silver <XAG=> and palladium <XPD=> rallying to their strongest
levels since July 2008. Spot silver was later bid at $19.21 an
ounce against $19.07, and palladium at $382 against $387.50.
Spot platinum <XPT=> rose as high as $1,493.50 an ounce, its
highest since August last year. It was later at $1,489 an ounce
against $1,478.50.
(Additional reporting by Risa Maeda and Miho Yoshikawa in
Tokyo; editing by James Jukwey)
((jan.harvey@thomsonreuters.com; +44 207 542 7744; Reuters
Messaging: jan.harvey.reuters.com@reuters.net))
