* Gold surge fuelled by inflation fears
* Deflation seen short-lived
* Platinum boosted, helped by auto sector optimism
(Recasts, adds comment/detail, changes dateline, pvs Singapore)
By Pratima Desai
LONDON, Dec 8 (Reuters) - Gold surged on Monday, helped by
higher oil prices, a lower dollar and investor concern about
inflationary pressures given the large amounts of money being
pumped into the global economy.
Autocatalyst material platinum <XPT=> jumped more than 6
percent to $840 an ounce, while palladium gained more than 11
percent to $178 on growing optimism about a rescue for the auto
industry in the United States.
Spot gold <XAU=> rose nearly 3 percent to $776.70 an ounce
and was up at $773.90/775.90 at 1030 GMT from $754.60 in New
York late on Friday, when it fell to $740.40, the lowest since
November 20 in a commodities-wide sell-off.
To some, talk of inflation is premature given the world is
currently grappling with the prospect of deflation, but forward
looking investors are adding to their holdings of the precious
metal to preserve the value of their portfolios.
"We will see some deflation, but that will be shortlived and
the inflationary impact of substantial fiscal stimulus ... will
inevitably lead to inflation," said John Meyer, analyst at
investment bank Fairfax.
"Gold will be an important commodity in the protection of
value," he said. Fairfax expects gold to average $900 an ounce
next year compared with a previous forecast at $550.
Central banks have pumped cash into the world's financial
system and slashed interest rates in an attempt to ease the
credit crunch and boost confidence.
Chinese and European leaders are due to plot their next
steps on Monday to move the world economy back from a precipice,
while stimulus measures presented, planned or pending injected
optimism into stock markets. []
IMMINENT BAILOUT
Adding to investor worries about inflation was oil <CLc1>,
which leapt 6 percent to above $43 a barrel. []
Gold often rises in line with oil, which can trigger
inflation, while a weaker U.S. currency makes metals priced in
dollars cheaper for holders of other currencies. []
"The dollar and oil are doing their bit for gold, but we are
seeing a lot of investor interest in gold," a trader said.
The U.S. Senate will reconvene later on Monday as
negotiators seek to draft legislation to provide the three
largest automakers with $15 billion in short-term loans.
Expectations that the plan could be agreed were bolstered
after U.S. President-elect Barack Obama said the auto industry
could not be allowed to collapse.
The news boosted platinum and palladium, used to make
autocatalysts that cut carbon emissions.
Palladium <XPD=> was at $178/185 an ounce from $159.50 on
Friday and platinum at $839/859 from $788.
"Having sustained substantial price corrections between
July-October, platinum is currently benefiting from a good
degree of bargain hunting buying, mainly from those with
longer-term outlooks," TheBullionDesk.com said in a note.
"However, with more negative auto data expected and
commodities generally under pressure the short-term view is
still a little negative."
Spot silver <XAG=> rose nearly 5 percent to $9.91 and was at
$9.84/9.82 from $9.45 on Friday.
(Reporting by Pratima Desai; editing by Peter Blackburn)
