* Gold firms despite dollar rebound on technical buying
* More U.S. quantitative easing expected
* Gold-silver ratio falls to lowest since August 2008
(Updates with New York closing prices, comment, changes byline
and dateline, previous LONDON)
By Carole Vaporean and Jan Harvey
NEW YORK/LONDON, Oct 11 (Reuters) - Gold moved back toward
its all-time high on Monday, despite late gains in the dollar,
as investors prepared for what many see as a likely second
round of economic stimulus by the U.S. Federal Reserve.
The U.S. dollar regained strength against the euro and yen
in late buying by investors who viewed its recent decline as
too far, too fast. []
But gold buyers looked past the short term, betting instead
that the Federal Reserve would almost certainly implement
so-called QE2 -- a second round of quantitative easing to
stimulate sputtering economic growth.
By 3:40 p.m. EDT (1940 GMT) spot gold <XAU=> had risen to
$1,353 an ounce, above Friday's closing bid at $1,343.25 but
below the all-time high of $1,364.60.
In New York, COMEX December gold futures <GCZ0> closed
$9.10 higher at $1,354.40 an ounce, setting a session peak at
$1,356.30 as they approached their record at $1,366.
Many players think the Fed will implement QE2 at its next
meeting after mid-term congressional elections, said Sterling
Smith, a Country Hedging Inc analyst in St Paul, Minnesota.
To boost the economy, the Fed is expected to print money in
order to buy U.S. government debt, which would be dilutive to
the dollar, Smith said.
Dollar weakness favors gold, not only because of exchange
rate differentials in non-U.S. markets, but also because the
yellow metal has been sought as an alternative to currency
investment and as a more solid asset than stocks.
The dollar has lost significant ground in recent weeks due
to speculation that the Fed will introduce further monetary
easing after a spate of soft economic data.
Many investors saw Friday's tepid to weak U.S. employment
report for September [] as the nail in the coffin
that convinced many investors the Fed would have to go forward
with QE2.
Afshin Nabavi, head of trading at MKS Finance in Geneva,
said he remained broadly positive on gold, with the dollar the
main driver of the market.
"$1,339-$1,340 ought to remain good support," he said. "A
breach of that could send us to $1,335, but I still think
$1,400 a good possibility for the year-end."
The dollar faced early pressure from the International
Monetary Fund's failure to reach an accord on how to tackle
currency tensions at meetings over the weekend. []
By late Monday, the dollar edged higher against the euro
and yen as traders booked profits on bets against the
greenback, failing to take out key resistance levels. []
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Graphic on gold's correlation with the dollar:
http://graphics.thomsonreuters.com/gfx1/SBrb_20101110115325.jpg
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UNEQUIVOCAL BENEFIT
Expectations for further quantitative easing are likely to
keep boosting precious metals, analysts said.
"We view 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," Morgan Stanley said in a note.
As well as currency effects, gold is being supported by
expectations investors will add to their bullion holdings as a
portfolio diversifier, in 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, and speculation is rife that other central banks, mainly
in Asia, will also lift their holdings. []
Silver <XAG=> hit its highest level since 1980 at $23.65 an
ounce and was later up at $23.31 versus $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 57, its lowest in
more than two years, from 68 in late August.
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For a graphic on the ratio, click:
http://graphics.thomsonreuters.com/AS/0810/RS_20101110113030.jpg
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Platinum <XPT=> fell to $1,679.50 an ounce against
$1,699.35, and palladium <XPD=> fetched $585.0 against
$583.53.
Prices at 2:24 p.m. EDT (1824 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1354.40 9.10 0.7% 23.6%
US silver <SIZ0> 23.349 0.244 0.0% 38.6%
US platinum <PLF1> 1690.80 -17.90 -1.0% 14.9%
US palladium <PAZ0> 588.75 1.15 0.2% 44.0%
Gold <XAU=> 1352.15 8.90 0.7% 23.3%
Silver <XAG=> 23.30 0.10 0.4% 38.4%
Platinum <XPT=> 1679.50 -17.35 -1.2% 14.6%
Palladium <XPD=> 586.00 2.47 0.4% 44.5%
Gold Fix <XAUFIX=> 1351.50 3.00 0.2% 22.4%
Silver Fix <XAGFIX=> 23.31 94.00 4.2% 37.2%
Platinum Fix <XPTFIX=> 1686.00 11.00 0.6% 15.0%
Palladium Fix <XPDFIX=> 584.00 4.00 0.7% 45.3%
(Reporting by Carole Vaporean in New York and Jan Harvey in
London; Editing by Dale Hudson)
