* Will the market see more QE from Fed?
* CPI on Friday could trigger lurch higher
* Coming up: U.S. Aug producer prices at 1230 GMT
(Releads, adds comment, updates prices)
By Pratima Desai
LONDON, Sept 16 (Reuters) - Gold hit a record high on
Thursday as the softer dollar and uncertainty about economic and
financial stability persuaded investors to seek a safe place to
park their assets.
Strong investment demand also pushed spot silver <XAG=> to
$20.75 an ounce, its highest since March 2008.
Spot gold <XAU=> was bid at $1,276.85 a troy ounce at 1119
GMT compared with $1,265.65 an ounce at the close on Wednesday.
Earlier on Thursday it hit a record $1,277.05 an ounce and
many expect it will hit $1,300 very soon.
"It's an insurance policy at the end of the day," said
Robin Bhar, analyst at Credit Agricole. "All the ingredients are
still there -- all the uncertainty and fear -- to keep gold
underpinned."
One potential trigger could be the conclusion of a meeting
of the U.S. Federal Reserve on Sept. 21, when the central bank
could announce further quantitative easing to stave off economic
slowdown in the world's largest economy.
"If the Fed says next week it is going to do more
quantitative easing...the inflation bugs will have a field day,"
said David Thurtell, analyst at Citi, who thinks gold could see
the $1,300 level next week.
Quantitative easing is normally a process by which central
banks attempt to pump money into the economy by buying bonds.
Excess liquidity could lead to too much money chasing too few
goods or services -- resulting in price pressures.
Also on the agenda is the U.S. fiscal outlook with the start
of the new financial year in the United States.
"People will worry as politicians commit to new spending,
especially with mid-term elections approaching," Thurtell said.
Gold market sentiment was helped by the euro, which rose
broadly on Thursday, hitting one-month highs versus the dollar
and the yen, after a Spanish bond auction produced lower average
yields than previously. []
"There's still no real confidence in the U.S. recovery. No
one sees any real reason for gold prices to decrease," said
Gwenael Chazal, head of Metal Trading.
NO GUARANTEES
Before the Fed's meeting next week triggers for upward
momentum could include the U.S. producer prices for August --
due on Thursday at 1230 GMT.
U.S. consumer prices for August due on Friday could also
spark a rally, which could take gold to $1,300 an ounce.
"The CPI data may give us more clues on the possibility of
the Fed expanding its QE programme," said Andrey Kryuchenkov,
analyst at VTB Capital.
"There is no guarantee that it will happen with macro data
more or less in line with consensus lately and some positive
surprises ... It was investment demand that pushed gold up and
investment demand will push it to $1,300."
Investor interest can be seen in the world's largest
gold-backed exchange-traded fund, the SPDR Gold Trust <GLD.P>,
which said its holdings fell to 1,294.746 tonnes by Sept. 15
from 1,298.698 tonnes on Sept. 14. []
But the fall follows a six-tonne rise the previous day.
Positive macro data is also partly behind the run higher in
industrial precious metals such as silver <XAG=>, platinum
<XPT=> and palladium <XPD=>. Spot silver was bid at $20.74 an
ounce from $20.49 late on Wednesday.
"Hopes for strong economic recovery are why silver is
experiencing a similar rush to that seen in platinum and
palladium earlier this year," Kryuchenkov said.
Spot platinum was bid at $1,608.00 an ounce from $1,604.50
at the close on Wednesday when it touched a four-month high of
$1,619.50. Palladium was at $554.50 at $553.78.
(Additional reporting by Veronica Brown; editing by Sue Thomas)
