* Gold at 3-week high, silver rising toward 30-year peak
* Precious metals up as dollar falls; but turnover light
* Silver outperforms; gold/silver ratio hits 4-year low
* Coming up: Year-end light-volume metals rally in focus
(Recasts, adds links to graphic, updates prices to market
close)
By Frank Tang
NEW YORK, Dec 29 (Reuters) - Gold climbed to its highest in
three weeks and silver rose toward a 30-year high on Wednesday,
as thin volume and a weaker dollar drove bullion to within $20
of its record.
Gold buying accelerated as the dollar hit a seven-week low
against the yen and fell versus the euro. U.S. bond yields
tumbled following a solid debt auction, diminishing the appeal
of the greenback. []
"Volume is light and somebody's making a decision on
whether to own some gold or to cover some short positions at
the end of the year. It can change in any given time during the
day," said George Nickas at futures broker FC Stone.
Precious metals extended gains from the previous session,
when bullion jumped over 1.5 percent on doubts over U.S.
economic recovery.
After several weeks of trendless trade, gold staged its
biggest two-day gain since Dec. 6 as many investors bet that
economic uncertainty and currency diversity would fuel more
demand from investors and banks. Prices are on track to rise 28
percent this year, a record 10th consecutive annual gain.
Analysts said that Tuesday's dismal U.S. economic data with
an unexpected deterioration in U.S. consumer confidence and a
sharp fall in U.S. single-family home sales suggested the
Federal Reserve will maintain an accommodative monetary policy
in 2011. []
Spot gold <XAU=> rose 0.4 percent to $1,410.69 an ounce at
2:39 p.m. EST (1939 GMT), after setting a three-week high of
$1,413.95. U.S. gold futures for February delivery <GCG1>
settled up $7.90 an ounce at $1,413.50.
COMEX gold volume was less than 70,000 lots, about
two-thirds lighter than the average for the past 30 days but in
line with lower turnover for most of the commodity complex
between the Christmas and New Year holidays, preliminary
Reuters data showed.
Silver led the rally again as it has for the past few
months, setting a three-week high of $30.66 an ounce.
Spot silver <XAG=> rose 1 percent to $30.56, driven 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, used to measure how many ounces of
silver is used to buy an ounce of gold, slumped to a four-year
low of 46.1, extending its steady decline since August. It has
averaged about 63 over the past year, and dropped below 45 only
twice in the past 25 years.
(Graphic: http://link.reuters.com/tyz93r)
Silver is one of the best-performing commodities so far
this year, gaining over 80 percent.
Gold is also on track for a near 30-percent gain this year,
fueled 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.
"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 Independent investor Dennis
Gartman.
Gartman, at times cautious on gold's rally this year, said
earlier this week he was expanding his position by buying
bullion in U.S. dollar terms as central banks stock up.
[]
Gold rose despite falling U.S. Treasury yields after strong
demand for seven-year notes in an auction gave a stronger bid
to Treasury securities across the curve. A sharp rise in U.S.
government bond yields on Tuesday fueled inflation concerns and
added to gold buying. []
(Graphic of asset returns in 2010:
http://r.reuters.com/veq33r)
PALLADIUM NEAR $800/OZ
Palladium hit fresh nine-year highs, driven by expectations
for robust demand next year.
Spot palladium <XPD=> reached a session peak of $793.50,
its highest since March 2001. It gained 0.6 percent to $789.97
an ounce.
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.
Platinum <XPT=> inched up 0.2 percent at $1,755.99 and held
near its seven-week highs.
Prices at 2:48 p.m. EST (1948 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCG1> 1413.50 7.90 0.6% 28.9%
US silver <SIH1> 30.704 0.381 0.0% 82.3%
US platinum <PLJ1> 1754.20 2.50 0.1% 19.3%
US palladium <PAH1> 793.40 6.20 0.8% 94.1%
Gold <XAU=> 1410.95 5.45 0.4% 28.7%
Silver <XAG=> 30.59 0.33 1.1% 81.7%
Platinum <XPT=> 1755.50 2.26 0.1% 19.8%
Palladium <XPD=> 790.00 4.78 0.6% 94.8%
Gold Fix <XAUFIX=> 1412.50 9.00 0.6% 27.9%
Silver Fix <XAGFIX=> 30.44 137.00 4.7% 79.2%
Platinum Fix <XPTFIX=> 1745.00 5.00 0.3% 19.0%
Palladium Fix <XPDFIX=> 791.00 3.00 0.4% 96.8%
(Additional reporting by Amanda Cooper in London and Rujun
Shen in Singapore; Editing by Lisa Shumaker and Jim Marshall)
