* Gold rises on mounting economic uncertainty
* Gold posted biggest monthly gain since November
* Coming up: U.S. private sector jobs due Wednesday
(Recasts, updates prices to market close, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, Aug 31 (Reuters) - Gold rallied 1 percent to hit
a two-month high on Tuesday, its biggest one-day gain in nearly
three weeks, as investors kept piling into the safe-haven asset
due to growing anxiety over the economic recovery.
Bullion surged more than 6 percent in August, its biggest
monthly gain since November.
"The gold market has seen very strong alternative asset
demand throughout the month of August. There is just a great
level of uncertainty surrounding the economy going forward, and
gold is continuing its role as the currency of choice," said
Bill O'Neill, partner at New Jersey-based commodities firm
LOGIC Advisors.
Gold prices stayed near a two-month high after minutes of
the Federal Reserve's last policy meeting showed the outlook
for the U.S. economy would have to deteriorate "appreciably" to
spur fresh support from the central bank. []
Analysts said gold looked set to retest its all-time peak
at $1,264.90 an ounce after Tuesday's breakout. The metal has
been on a strong technical rising trend that started back in
late July.
(Graphic: http://link.reuters.com/suf58n)
Spot gold <XAU=> was at $1,248.40 an ounce at 3:13 p.m. EDT
(1913 GMT), against $1,236.66 late in New York on Monday,
having hit a new session peak of $1,249.90, its highest since
late June. U.S. gold futures for December delivery <GCZ0>
settled up $11.10 an ounce to $1,250.30.
On Tuesday, gold rallied with U.S. data showing improving
consumer confidence and more-than-expected gain in homes
prices. []
However, bullion has also benefited from fears of a
double-dip recession as recent U.S. economic reports pointed to
a stalling economic recovery.
"People are fearful enough of what else is going on in the
economy and that is sufficient to justify what is going on in
gold," said Peter Hillyard, head of metal sales, Europe at
ANZ.
"It's a bit of a continuation of what is going on in other
markets with month-end and I think $1,300 is on the
cards...certainly for September," he said.
DOUBLE-DIP RECESSION?
The fear of the U.S. economy sliding back into recession
boosted the yen -- which benefits at times of economic stress
-- and put global equities and industrial commodities under
pressure.
(Graphic: http://link.reuters.com/kuv45m)
Credit Suisse analyst Tom Kendall said a revival in
physical demand for gold and flows into exchange-traded funds,
central bank interest, persistently low bond yields and a more
neutral positioning in Comex futures were all constructive for
the precious metal.
Physical gold demand tends to rise in August as jewelers
stockpile inventory ahead of India's festival season, which
starts with Raksha Bandhan on Aug. 24 and extends until
Dhanteras in November, the biggest gold-buying day.
Among other commodities, oil prices fell $3 to under $72
per barrel, hurt by expectations that crude inventories would
rise, reflecting lower demand from the United States. Base
metals also slipped. []
Financial markets are awaiting key U.S. payrolls data for
August due on Friday. U.S. data releases are being closely eyed
for further signs of weakness in the economic recovery, with
any fresh risk aversion seen potentially pressuring higher-risk
assets and lifting gold.
Silver <XAG=> followed gold's lead, rising by 2 percent to
around $19.32 an ounce, up from $18.96 late on Monday. Silver
has gained nearly 7 percent in August, its best monthly
performance since a 13.1 percent gain in November 1999.
Platinum <XPT=> was at $1,519 an ounce against $1,525.20,
while palladium <XPD=> was at $500 against $493.93, having
recovered from an earlier drop to an intraday low at $483.75.
Prices at 4:07 p.m. EDT (2007 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1216.60 -0.10 0.0% 11.0%
US silver <SIZ0> 19.432 0.358 0.0% 15.4%
US platinum <PLV0> 1526.20 -5.40 -0.4% 3.8%
US palladium <PAZ0> 501.85 1.75 0.3% 22.7%
Gold <XAU=> 1247.80 11.14 0.9% 13.8%
Silver <XAG=> 19.30 0.37 1.8% 14.6%
Platinum <XPT=> 1518.00 -7.20 -0.5% 3.6%
Palladium <XPD=> 475.50 8.50 1.8% 17.3%
Gold Fix <XAUFIX=> 1214.25 -0.75 -0.1% 10.0%
Silver Fix <XAGFIX=> 18.06 14.00 0.8% 6.3%
Platinum Fix <XPTFIX=> 1527.00 11.00 0.7% 4.2%
Palladium Fix <XPDFIX=> 473.00 2.00 0.4% 17.7%
(Additional reporting by Amanda Cooper and Jan Harvey in
London;editing by Sofina Mirza-Reid)
