* Dollar take little reassurance from World Bank, IMF meets
* Further U.S. quantitative easing still seen on the cards
* Gold:silver ratio falls to lowest since Aug. 2008
(Updates prices, adds graphic)
By Jan Harvey
LONDON, Oct 11 (Reuters) - Gold prices rose back towards
$1,350 an ounce in Europe and silver touched a new 30-year high
on Monday as expectations the United States will introduce
further monetary easing undermined faith in the dollar.
Spot gold <XAU=> was bid at $1,348.70 an ounce at 1122 GMT,
against $1,343.25 late in New York on Friday. U.S. gold futures
for December delivery <GCZ0> rose $4.50 an ounce to $1,349.80.
Spot gold is still within sight of last week's record $1,364.60.
The dollar slipped on Monday after world finance ministers
failed to reach agreement on currency imbalances at a series of
meetings this weekend, leaving the U.S. Federal Reserve set to
pursue loose monetary policy to support its ailing economy.
[]
"We don't seem to have any agreement on any sort of currency
accord," said Citi analyst David Thurtell.
An inverse link between gold and the dollar has been
particularly strong in recent weeks, he added. "Gold has pretty
much stuck to tracking dollar moves."
Historically a weaker dollar boosts gold as it makes
dollar-priced commodities cheaper for other currency holders and
lifts the metal's appeal as an alternative asset.
This correlation weakened early this year as both gold and
the dollar benefited from concerns over European sovereign debt
levels. However, it has now reasserted itself.
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For a graphic showing gold's evolving correlation with the
dollar, click:
http://graphics.thomsonreuters.com/gfx1/SBrb_20101110115325.jpg
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"Precious metals ... continued to benefit from a weak
U.S. dollar and the 'race to the bottom' in global currency
markets," said Morgan Stanley in a note.
"We view QE (quantitative easing) and its monetary
consequences as an unequivocal benefit for gold and silver in
particular, as investors seek out their role as stores of value
in times of fiat currency risk."
As well as currency effects, gold is being supported by
expectations investors will add to their bullion holdings as a
portfolio diversifier, both in the private and official sectors.
Russia's central bank has bought over 100 tonnes of gold on
the domestic market this year, board member Sergei Shvetsov said
on Monday, and speculation is rife that other central banks,
mainly in Asia, will also lift their holdings. []
INVESTOR DEMAND
New investment products are also emerging, with two money
managers in China vying to launch the country's first gold funds
as early as this year to meet investor demand for the precious
metal. []
Meanwhile South Africa's Standard Bank <SBKJ.J> said on
Monday it would act as the first metal provider, participating
dealer and market-maker for a Hong Kong-based firm that plans to
launch a new gold exchange-traded fund (ETF). []
Gold supply is struggling to meet rising demand. Output in
number one producer China was 27.655 tonnes in August, the
Ministry of Industry and Information Technology said on Monday,
down 11 percent from 31.059 tonnes in July. []
Among other precious metals, silver <XAG=> hit its highest
level since 1980 at $23.65 an ounce and was later bid at $23.36
an ounce against $23.20.
Holdings in the iShares Silver Trust <SLV>, the world's
largest silver-backed exchange-traded fund, rose to a new
all-time high at 10,085.62 tonnes on Friday. []
The gold-silver ratio - the number of ounces of silver
needed to buy an ounce of gold - fell to its lowest in more than
two years on Monday near 57, down from above 68 in late August,
as silver became increasingly expensive compared with gold.
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For a graphic on the ratio, click:
http://graphics.thomsonreuters.com/AS/0810/RS_20101110113030.jpg
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"We continue to favour silver as industrial demand and
imports into China are expected to push the gold/silver ratio
lower," said Deutsche Bank in a weekly note.
Meanwhile platinum <XPT=> was at $1,693.50 an ounce against
$1,699.35, and palladium <XPD=> at $587 against $583.53.
(Reporting by Jan Harvey; editing by Jane Baird)
