* Bullion retains gains even after dollar pares losses
* Silver surges toward highs; gold ratio at 46-month low
* Dollar recoups losses, setting aside poor econimic data
(Recasts, updates prices, market activity; adds byline)
By Jonathan Leff
NEW YORK, Dec 28 (Reuters) - Gold prices jumped nearly 1.5
percent and silver streaked toward a 30-year record on Tuesday,
as thin volume and bullish hopes for next year drove bullion
above $1,400 an ounce for the first time in two weeks.
Precious metals held their gains to trade at the day's
highs even after the U.S. dollar reversed deep early losses.
Economic data showing an unexpected deterioration in U.S.
consumer confidence and a sharp fall in U.S. single-family home
sales fed gold's rise as the dollar gyrated. []
"There's a little year-end rush to see if we can post some
high numbers to mark the books against," said Fred Schoenstein,
a trader at Heraeus Precious Metals Management in New York.
"Volumes are very low so it doesn't take a lot to push it."
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.
After modest early gains, spot gold <XAU=> shot more than
$20 an ounce higher in early U.S. trade, hitting a session peak
of $1,406.15, the highest since Dec. 14. It was up 1.5 percent
at $1,405.05 by 11:40 a.m. EST (1640 GMT).
U.S. gold futures for February delivery <GCG1> rose 1.6
percent, or $22.60, to $1,405.50. Trading volume picked up from
Monday's lackluster activity, with over 85,000 lots already
traded, about one-half the norm. But volumes were still subdued
by the UK holiday and lack of official gold fixings.
Silver led the rally as it has for the past few months,
with traders rushing to clambor on board one of the
best-performing commodities this year.
After pacing gold earlier, spot silver <XAG=> shot ahead by
midday, jumping 2.8 percent to $30.08 an ounce, nearing the
30-year high of $30.68 touched on Dec. 7. Prices have surged
nearly 79 percent this year versus gold's 28 percent rise.
The gold-silver ratio, used to measure how many ounces of
silver is used to buy an ounce of gold, slumped to a new
46-month low of 46.7, extending its steady decline since
August. It has averaged about 63 over the past year, and
dropped below 45 only twice in the past 25 years. (Graphic:
http://link.reuters.com/xuv83r)
"I don't think it's unrealistic to see silver make a shot
for $30.50 or $30.75 before the end of the year. But gold I'd
be very surprised to see it back to its highs," said
Schoenstein. But he also added that the precious metals could
yet succumb to year-end profit taking later this week.
The euro gained initially on the dollar but later turned
negative, briefly trading below $1.31 on Tuesday amid lingering
worries about the euro zone debt crisis. []
That was despite the latest set of indicators that appeared
to paint a more downbeat picture of the U.S. economy, at odds
with other recent signs showing the recovery is accelerating
and boosting demand for gold as a shelter from uncertainty.
The Conference Board, an industry group, said its index of
consumer attitudes slipped to 52.5 in December from an upwardly
revised 54.3 in November. And Standard & Poor's/Case-Shiller
composite housing index of 20 metropolitan areas declined 1
percent in October from September. []
GARTMAN ADDS
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. (For a graphic
on the outlook see: http://link.reuters.com/wet83r)
"Asians have been non-stop buyers, and want to load up when
gold is some 40 bucks off the all-time highs," said a
Singapore-based trader.
Prices at 12:00 p.m. EST (1700 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCG1> 1405.00 22.40 1.6% 28.2%
US silver <SIH1> 30.185 0.945 3.2% 79.2%
US platinum <PLF1> 1749.30 13.70 0.8% 18.9%
US palladium <PAH1> 784.70 17.60 2.3% 91.9%
Gold <XAU=> 1404.20 21.15 1.5% 28.1%
Silver <XAG=> 30.15 0.88 3.0% 79.0%
Platinum <XPT=> 1745.49 13.50 0.8% 19.1%
Palladium <XPD=> 781.22 14.72 1.9% 92.7%
(ReutersMessaging: rujun.shen.thomsonreuters.com@reuters.net)
