* Gold bolstered on China's $600 billon stimulus plan
* Industrial metals surge, dragging gold higher
* Dollar weakens against euro as risk appetite improves
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Nov 10 (Reuters) - Gold ended 2 percent
higher but off session peaks Monday as investors took profits
after China's economic stimulus plan triggered a broad-based
commodity rally and stirred inflation worries.
Traders said that the inflationary pressure because of the
economic stimulus plans by central banks around the world could
bolster gold's status as a hedge against inflation.
"I believe we are in a recession, and maybe we (gold) will
be the first to come out of it. When everybody is printing
money, the question is: when does inflation set in, or if it
does at all?" said Jonathan Jossen, COMEX gold options floor
trader in New York.
A near $600 billion government spending package announced
by China on Sunday helped allay risk aversion and fueled gains
in oil, base metals and commodities across the sector, carrying
gold higher.
Spot gold <XAU=> was at $748.30, up 1.8 percent from
Friday's close of $734.80. Earlier, it reached a peak of
$767.80 an ounce.
U.S. gold futures for December delivery <GCZ8> settled up
$12.30, or 1.7 percent, at $746.50 an ounce on the COMEX
division of the New York Mercantile Exchange.
"The weakness in the U.S. dollar ... and the rise in crude
oil and industrial metals reflect the announcement made by the
Chinese government yesterday for a stimulus package of roughly
$568 billion," said Dresdner Kleinwort consultant Peter
Fertig.
"This should spur investment in housing and infrastructure
in the next two years, which will (lead to) stronger demand for
energy and base metals. This is also a supportive factor for
gold," Fertig said.
China launched its stimulus plan on Sunday, pledging nearly
$600 billion in extra spending by the end of 2010.
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Base metals jumped in response to the plan, with copper
surging nearly 10 percent, nickel 13 percent and zinc around 7
percent following the news. All the metals have lost
substantial ground in recent months. []
Oil also rallied as much as 5 percent after Saudi Arabia
said it will cut supply to Asia and on hopes global efforts to
stimulate growth could underpin demand. []. However, crude
oil later pared gains and was briefly on the downside after a
pullback in U.S. stocks.
DOLLAR WEAKENS
The dollar weakened against the euro as risk appetite
improved as news of China's plan made traders more willing to
take on risk. []
Among other precious metals, silver <XAG=> tracked gold
higher to a peak of $10.51 an ounce, up 5 percent, before
settling back at $10.26, up 3.2 percent from Friday's close of
$9.94.
Platinum prices climbed more than 3 percent as fears abated
that the demand picture for industrial precious metals will
continue to worsen.
However, all the platinum group metals remained well off
highs after posting sharp losses in recent months on waning
demand from carmakers, which account for more than 50 percent
of PGM consumption.
Platinum <XPT=> fetched $849, up 1.1 percent from Friday's
finish.. Its sister metal palladium <XPD=> was at $219.50, down
2.4 percent from its previous close.
(Editing by Christian Wiessner)
