* Weak economic data boosts gold as alternative asset
* Gold benefits from market talk of more QE from Fed
* Silver outperforms gold, gold/silver ratio drops
* Coming up: U.S. August consumer prices due Friday
(Recasts, updates prices to market close, adds comments)
By Frank Tang
NEW YORK, Sept 16 (Reuters) - Gold hit record highs on
Thursday for the second time this week, as currency volatility
and uncertainty about economic recovery prompted investors to
pile into the alternative asset.
Investment demand propelled spot silver <XAG=>, often
dubbed the poor man's gold, to just below $21 an ounce -- its
loftiest level since March 2008 -- and extended that metal's
winning streak to five days. COMEX silver open interest reached
its highest since early 2008, before the economic crisis.
(Graphic: http://link.reuters.com/jap24p )
Peter Buchanan, senior economist at CIBC World Markets,
said gold benefited from a drop in British retail sales and a
weaker U.S. Philly Fed factory index, while a sharpened U.S.
tone on China's currency increased foreign-exchange volatility.
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"A week ago, people were dismissing double-dip recession
fears following a solid U.S. payrolls report. Now, perhaps a
few people are thinking: 'Not so fast!'," he said.
Analysts said sharp moves in currencies were bolstering
gold's safe-haven appeal. On Wednesday, the dollar surged 3
percent against the yen after Japan intervened to weaken its
currency for the first time in six years.
Spot gold <XAU=> fetched $1,274.80 an ounce at 4:01 p.m.
EDT (2001 GMT), having set another record high at $1,277.70 in
earlier trade. It closed at $1,265.65 an ounce on Wednesday.
Still, gold remained sharply below its inflation-adjusted
all-time high above $2,200 an ounce.
(Graphic: http://link.reuters.com/gup24p )
A potential trigger for further gains in the metal may come
from the U.S. Federal Reserve, which meets on Sept. 21 and
could announce further quantitative easing (QE) to stave off a
slowdown in the world's largest economy.
"If the Fed says next week it is going to do more
quantitative easing ... the inflation bugs will have a field
day," said David Thurtell, analyst at Citi, who thinks gold
could hit $1,300 next week.
QE is a process by which central banks attempt to pump
money into the economy by buying bonds. Excess liquidity could
lead to too much money chasing too few goods or services,
resulting in upward price pressures.
HSBC's chief commodity analyst James Steel said gold had
rallied significantly in late 2008 when the Fed turned to
unconventional economic stimulus, and market talk of further QE
has accompanied gold's largest rally this year.
"I'm quite surprised we are here really, gold seems to be
playing follow the leader with silver ... and the dollar's
weakness," Simon Weeks, head of precious metals at Scotia
Mocatta, said.
SILVER OUTPERFORMS GOLD
Since Aug. 24, silver has rallied nearly 18 percent,
outperforming gold's 10 percent rise over the same period,
Reuters data showed.
Michael Daly, gold specialist at futures broker PFGBest,
said strong industrial demand from the electronics and
solar-panel sectors was helping to drive the surge in silver.
Gold's rally to record highs has also attracted investors
to silver due to the latter's relative affordability, he said.
"A lot of investors feel like they have missed the boat on
gold, and now they think gold may pull back, but they are
comfortable buying silver at $20 an ounce," Daly said.
The gold-to-silver ratio -- which shows how much silver an
ounce of gold can buy -- fell to just above 60, its lowest
since January.
Silver <XAG=> rose 0.2 percent to $20.76 an ounce from
$20.49 on Wednesday. In earlier trade, silver hit $20.82, its
highest since early 2008.
Spot platinum <XPT=> rose to $1,607 an ounce from $1,604.50
in New York late on Wednesday, and palladium <XPD=> eased to
$548 versus the previous session's finish at $553.78.
Prices at 4:21 p.m. EDT (2021 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1273.80 5.10 0.4% 16.2%
US silver <SIZ0> 20.745 0.203 0.0% 23.2%
US platinum <PLV0> 1611.90 6.60 0.4% 9.6%
US palladium <PAZ0> 546.95 -10.20 -1.8% 33.8%
Gold <XAU=> 1273.90 8.25 0.7% 16.2%
Silver <XAG=> 20.76 0.27 1.3% 23.3%
Platinum <XPT=> 1607.00 2.50 0.2% 9.7%
Palladium <XPD=> 548.50 -5.28 -1.0% 35.3%
Gold Fix <XAUFIX=> 1272.50 1.25 0.1% 15.3%
Silver Fix <XAGFIX=> 20.76 32.00 1.6% 22.2%
Platinum Fix <XPTFIX=> 1602.00 7.00 0.4% 9.3%
Palladium Fix <XPDFIX=> 554.00 3.00 0.5% 37.8%
(Graphic by Van Tsui in New York, additional reporting by
Pratima Desai and Veronica Brown in London, editing by Dale
Hudson)
