PRECIOUS-Gold climbs 2 pct after ECB, BoE rate decisions

                                
 * ECB keeps rates on hold at 2 pct, BoE cuts by 50 bps
 * Goldman Sachs ups 3-mth gold price forecast to $1,000/oz
                                
 * Aquarius Platinum cuts 2009 output forecast by 100,000/oz
                                
 
                                
 (Updates with Bank of England, ECB rates decisions)
                                
 By Jan Harvey
                                
 LONDON, Feb 5 (Reuters) - Gold was as much as 2 percent
higher on Thursday after the European Central Bank left interest
rates on hold and the Bank of England cut its key rate, buoyed
by buying of the metal as a haven from risk.
                                
 However, the precious metal retreated from highs as the
dollar firmed against the euro in the wake of the ECB decision,
denting gold's appeal as a currency hedge.
                                
 Spot gold <XAU=> was quoted at $920.45/922.45 an ounce at
1459 GMT, up from $904.70 in New York late on Wednesday. Earlier
it touched a high of $924.00.
                                
 U.S. gold futures for April <GCJ9> delivery on the COMEX
division of the New York Mercantile Exchange rose $20.40 to
$922.00 an ounce.
                                
 "We are seeing more investor interest in gold," said Citi
analyst David Thurtell. "Some like it as a safe haven in times
of high economic uncertainty, and others like it as a hedge
against inflation.
                                
 "While deflation is the short-term threat, there is a
concern that all this monetary and fiscal stimulus will
eventually cause inflation to explode," he said.
                                
 The ECB opted to leave its interest rates on hold at 2
percent. The bank's president Jean-Claude Trichet had already
flagged that no rate cut was on the cards.[ID:nN05348323]
                                
 At a news conference following the decision, Trichet
signalled that the bank may resume its monetary easing policy in
March. [ID:nECBNEWS]
                                
  The Bank of England earlier cut its rates by the expected
50 basis points, in an attempt to revive the flagging UK
economy. [ID:nL5480672]
                                
 "The backdrop of rate cuts has been supportive for gold over
the last few weeks and months, mainly on the fear of inflation
further down the line," said VM Group analyst Matthew Turner.
"Today's moves were just a confirmation of that theme."
                                
 Interest in gold as a safe store of value is fuelling buying
among risk-averse investors.
                                
 Interest in physical bullion in the form of coins and bars
and investment products such as gold-backed exchange-traded
funds has soared as fears over the outlook for the global
economy has made asset prices volatile.
                                
 Investors also fear the large amount of government debt
poured into the banking sector will fuel inflation.
                                
 "The fact that gold as an asset class has more trust in it
than a lot of other financial products out there at the moment
means people are continuing to push money in there," said
Commerzbank trader Rory McVeigh.
                                
 "There has been steady buying of small investment-type
physical gold, particularly in Europe, and exchange-traded
funds."
                                
 The world's largest bullion-backed ETF, New York's SPDR Gold
Trust <GLD>, said its holdings hit another record on Wednesday,
rising to 859.49 tonnes. [ID:nSP34637]
                                
 
                                
 SAFE
                                
 Goldman Sachs lifted its three-month gold forecast to $1,000
an ounce from $700 an ounce, citing safe-haven demand for the
metal. [ID:nSP71612]
                                
 "The gold price rally has been driven by surging demand for
gold in all forms: physical gold, exchange traded funds and
futures contracts and investors seek a 'safe store of value',"
the bank said in a note.
                                
 "It is also important to emphasise that the recent strong
demand for gold has not been irrational, but rather pretty much
in line with the probabilities of financial and sovereign
default."
                                
 Silver <XAG=> climbed to $12.77/12.85 an ounce against
$12.51 late in New York on Wednesday. Platinum <XPT=> was quoted
at $976/981 an ounce against $964.
                                
 Aquarius Platinum <AQP.L>, the world's fourth-largest
producer of the white metal, cut its 2009 production target by
100,000 ounces to 475,000 ounces, and said its output fell 6
percent in 2008 from the year before. [ID:nL4228773]
                                
 "News of platinum producers struggling with costs and
production may help platinum prices move higher, although
continuing negative news on auto sales may hold prices back,"
Fairfax analyst John Meyer said.
                                
 Palladium <XPD=> was at $198.50/203.50 an ounce from $194.
Earlier it rose nearly 5 percent to a high of $203.50, driven by
buying for palladium-backed ETFs, dealers said.
 (Editing by Keiron Henderson)