* Gold surge fueled by inflation fears, economic optimism
* Deflation seen short-lived
* Platinum boosted, helped by auto sector optimism
(Recasts, updates with quotes, closing prices, adds byline and
NEW YORK to dateline)
By Frank Tang and Pratima Desai
NEW YORK/LONDON, Dec 8 (Reuters) - Gold surged on Monday,
boosted by an oil rally, a lower dollar and investor concern
about inflationary pressures from 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 12
percent to $179.50 on growing optimism about a rescue for the
auto industry in the United States. []
"The government is going to bail out Chrysler, GM and Ford.
Everything is going to be a little bit better down the road.
There is more confidence in the financial markets, so the
buyers are going back into the markets," said Jonathan Jossen,
COMEX gold options floor trader.
Spot gold <XAU=> was at $773.60 at 2:35 p.m. EST (1935
GMT), up 2.6 percent from Friday's close of $754.60.
U.S. gold futures for February delivery <GCG9> settled up
$17.10, or 2.3 percent, at $769.30 an ounce on the COMEX
division of the New York Mercantile Exchange.
To some, talk of inflation is premature given the world is
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 short-lived
and the inflationary impact of substantial fiscal stimulus ...
will inevitably lead to inflation," said John Meyer, analyst at
investment bank Fairfax.
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.
IMMINENT BAILOUT
Adding to investor worries about inflation was oil <CLc1>,
which rallied over 8 percent to above $44 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 White House said it had made progress in talks with
congressional leaders seeking to complete a rescue package for
automakers and it was "very likely" a deal could be reached on
Monday.
Expectations that the plan could be agreed were bolstered
after U.S. President-elect Barack Obama provided hope with a
weekend pledge to create more than 2.5 million new jobs by 2011
and launch the largest investment in U.S. infrastructure since
the 1950s.
The news boosted platinum and palladium, used to make
autocatalysts that cut carbon emissions.
Palladium <XPD=> was at $172.50, which was 8.2 percent
higher than Friday's late quote of $159.50, and platinum at
$831.00 an ounce, up 5.4 percent from its previous finish of
$788.
However, platinum prices are still more than 60 percent
below the record high of $2,290 an ounce hit in March.
Spot silver <XAG=> rose as much as 9 percent to $10.35 an
ounce and was at $10.03, which was 6.1 percent higher than its
Friday close of $9.45.
The precious industrial metal has in recent weeks moved
alongside base metals such as copper <MCU3>.
(Editing by Christian Wiessner)
