* Sudden dollar drop drives up gold in thin trade; UK shut
* Gold-silver ratio near 46-month low
* COMING UP: U.S. consumer confidence, Dec; 1500 GMT
(Updates prices)
NEW YORK, Dec 28 (Reuters) - Gold prices jumped nearly 1.5
percent on Tuesday, topping $1,400 an ounce for the first time
in two weeks as the dollar sank and dealers anticipated an
unprecedented eleventh annual rise next year.
After several weeks of trendless trade, gold staged its
biggest one-day gain since Dec. 3 as many investors bet that
economic uncertainty and currency diversity would fuel more
demand from investors and banks. Prices are on track to rise 28
percent this year, a record 10th consecutive annual gain.
"The end of the year loss of confidence in the dollar value
has brought gold players back into the market on the long side.
It's hard to say more than that," said George Nickas, a gold
broker at FC Stone in New York.
After modest early gains, spot gold <XAU=> shot more than
$20 an ounce higher in early U.S. trade, hitting a session peak
of $1,405.15, the highest since Dec. 14. It was up 1.34 percent
at $1,402.20 by 9:34 a.m. EST (1434 GMT).
U.S. gold futures for February delivery <GCG1> rose 1.5
percent, or $20.60, to $1,403.50. Trading volume picked up from
Monday's lackluster activity, with over 55,000 lots already
traded, nearly one-third of this year's average. But activity
was still subdued by the UK holiday and lack of official gold
fixings.
The dollar's abrupt decline on Tuesday aided gold, which is
often used as a hedge against greenback weakness or inflation.
The dollar index <.DXY> dropped 0.6 percent, its biggest
decline in two weeks, as corporate buying lifted the Swiss
franc and key buy-stops helped the euro recover in a thin
market.
Independent investor Dennis Gartman, who has at times been
cautious on gold's rally this year, said he was now expanding
his position by buying bullion in U.S. dollar terms as central
banks stock up. []
"We are long of gold in non-U.S. dollar terms, and now we
wish to add to the position by buying gold in U.S. dollar
terms," he said in his daily Gartman Letter.
"This is consistent with our thesis that gold is, at the
margin, becoming a reservable asset of greater interest by the
reserve banks of Asia, Africa and likely also South America. At
the margin, they are increasing their gold holdings at the
expense firstly of the EUR and now of dollars."
Next year is expected to mark the end of a lengthy trend of
official sector bullion sales, with central banks globally
turning net buyers for the first time in decades. Investors are
also expected to continue piling in.
Spot gold <XAU=> is biased to rise to $1,410 per ounce as
an upward wave "c" is unfolding towards an eventual target at
$1,430, said Wang Tao, a Reuters market analyst.
[]
(Graph, 24-hour gold technical outlook:
http://link.reuters.com/wet83r)
"Gold is riding high on its own, but with the euro/dollar
bid, it's even better," said a Singapore-based trader. "Asians
have been non-stop buyers, and want to load up when gold is
some 40 bucks off the all-time highs."
Spot silver <XAG=> led gains, rising 1.5 percent to $29.70
an ounce, up 76 percent so far this year.
The gold-silver ratio, used to measure how many ounces of
silver is used to buy an ounce of gold, stood at 47.2, near its
46-month low of 47.1 hit last week.
The ratio has been on a steady decline since August this
year, when silver started its spectacular rally. Spot prices
had risen by near 70 percent in the past five months, compared
to a 19-percent ascent in gold over the same period.
(Graphic, gold-silver ratio:
http://link.reuters.com/vys83r)
Prices at 9:44 a.m. EST (1444 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCG1> 1402.50 20.00 1.4% 27.9%
US silver <SIH1> 29.760 0.520 1.7% 76.7%
US platinum <PLF1> 1751.00 15.50 0.9% 19.0%
US palladium <PAH1> 778.20 11.10 1.5% 90.3%
Gold <XAU=> 1402.10 18.44 1.3% 27.9%
Silver <XAG=> 29.72 0.46 1.6% 76.5%
Platinum <XPT=> 1748.49 16.99 1.0% 19.3%
Palladium <XPD=> 774.47 7.97 1.0% 91.0%
(rujun.shen@thomsonreuters.com +65 6870-3726)
