* Palladium hits nine-year high of $787.25/oz
* Spot silver at three-week highs
* Coming up: U.S. weekly mortgage index; 1200 GMT
(Adds comment, refreshes prices)
By Amanda Cooper
LONDON, Dec 29 (Reuters) - Gold notched up a second straight
day of increases to near two-week highs on Wednesday, closing in
on a tenth consecutive yearly gain as doubt reemerged over the
U.S. economic outlook and weakened the dollar.
Palladium hit fresh nine-year highs, driven by expectations
for robust demand next year, while silver hovered near
three-week highs.
The latest U.S. data, which showed consumer confidence
unexpectedly worsening in December and a drop in prices of
single-family homes in October, was at odds with other signs
suggesting recovery was accelerating in the world's largest
economy. []
Spot gold <XAU=> edged up 0.1 percent to $1,406.15 an ounce
by 1448 GMT, after hitting a two-week high of $1,406.75 on
Tuesday. U.S. gold futures for February delivery <GCG1> were
virtually unchanged on the day at $1,404.20.
"Is gold a bubble? Perhaps, but the trend is still clearly
'from the lower left to the upper right' on the charts and in
all currency varieties," said Dennis Gartman, author of the
Gartman investment newsletter.
"Only the courageous or the ill-advised shall choose to
'fade' this trend and we are neither. Certainly we are not the
former," he said, adding the group had added to its long
position in dollar-priced gold on Tuesday.
Gold is on track for a near 30-percent gain this year,
fuelled by investors seeking an alternative to increasingly
volatile currencies, stocks and bonds, against a backdrop of an
uncertain U.S. economic outlook and Europe's debt crisis.
U.S. Treasury prices <US10YT=RR> struggled to remain in
positive territory as anxiety grew over the coming $29 billion
sale of seven-year notes. []
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DOLLAR STEADIES
The dollar pared earlier gains to decline broadly, falling
against the yen as the return to Japan of company earnings at
the year-end outweighed higher Treasury yields. []
"The U.S. economy outlook and monetary policy is a key
factor that influences gold prices. We've seen data alternate
between good and bad, showing that the economy is recovering,
but without a strong momentum yet," said Hou Xinqiang, an
analyst at Jinrui Futures based in China.
Hou expected gold prices to be rangebound with a strong
support level at $1,360 in the short term, before they rally in
the coming year.
Trading on the physical market was thin, with many market
players sidelined over the holiday period, dealers said.
Spot silver <XAG=> hit a three-week high of $30.52 an ounce,
and was last at $30.46, still up 0.7 percent on the day, led by
a broad push higher across the commodities complex, with copper
<CMCU3> at record highs and crude oil steadying above $91 a
barrel. [] []
The gold-silver ratio, which reflects the number of ounces
of silver needed to buy one ounce of gold, fell to a new
four-year low of 46.6, compared with a 10-year average of 62.2.
Spot palladium <XPD=> reached a session peak of $792.50, its
highest since March 2001, before trading at $789.18, up 0.5
percent on the day.
Platinum <XPT=> was trading at $1,743.00, down 0.6 percent,
but still near seven-week highs.
Palladium has been the top pick of a number of funds and
trading houses, which have cited demand from China, the world's
largest auto market, as one of the prime drivers of consumption
for the metal, which is used in catalytic converters.
(Additional reporting by Rujun Shen in Singapore; Editing by
Alison Birrane)
