* Gold rises to record $1,393.16/oz late NY session
* Dollar drops after Fed announces $600 bln easing
* Silver hits 30-year peak, palladium fresh 9-1/2 yr high
* Coming up: U.S. October nonfarm payrolls due Friday
(Recasts, updates to show gold sets a record high)
By Frank Tang
NEW YORK, Nov 4 (Reuters) - Gold prices surged 3 percent to
an all-time high late in New York session on Thursday, the
biggest one-day rise since early 2009, as the dollar slumped a
day after the Federal Reserve unleashed a second round of
monetary easing.
Silver rose 6 percent to its highest level since 1980,
palladium was up 4 percent at a 9-1/2-year peak and platinum
reached its strongest price since 2008.
"The dollar got hammered, and a lot of people are concerned
that we are headed for the winds of inflation. It's a perfect
storm for gold today," said Bill O'Neill, partner of New
Jersey-based commodities firm LOGIC Advisors.
Investors now turn their attention to Friday, when the U.S.
nonfarm payrolls report will show the state of the world's
largest economy, and the Bank of Japan will announce a rate
decision, after its asset-buyback plan last month rocked global
markets. []
Spot gold <XAU=> rose 3.4 percent to a record of $1,393.16
an ounce. It later was up 3.3 percent at $1,391.39 an ounce at
4:19 p.m. EDT (2019 GMT).
U.S. gold futures for December delivery <GCZ0> settled up
$45.50 at $1,383.10, with trading volume at about 250,000 lots,
sharply above its 250-day moving average, preliminary Reuters
data showed.
The Fed's move, its second round of quantitative easing,
stripped almost 1 percent off the value of the dollar against a
basket of currencies <.DXY>, triggering a broad-based precious
metals rally.
The inverse link between gold and the dollar strengthened
after the Fed announcement, Reuters data showed, with the
hourly correlation between the two tightened to peak at a
negative 0.66 on Thursday.
(Graphic: http://link.reuters.com/kum83q )
"The relationship between the dollar and gold remains a
very strong one and the recent move post-QE is a dollar-related
move more than anything else," said RBS commodities strategist
Daniel Major. "It's pretty constructive on a near-term basis,
provided the market continues to trade gold very closely to
moves in the currency."
The Federal Reserve committed $600 billion to buy
government bonds late on Wednesday in a fresh effort to support
a struggling U.S. economy, undermining the U.S. currency and
stoking fears over longer-term inflation. Gold benefited as a
hedge against a weaker dollar and inflation. []
The dollar's third successive fall brought its losses this
week to 1.5 percent as the market concluded that the Fed's move
spelled more dollar supply that would be likely to weigh it
down further. [] []
Weakness in the greenback tends to benefit dollar-priced
commodities as it cuts their cost for other currency holders,
but it benefits gold in particular as the metal can be bought
as an alternative asset to the currency.
"There is definitely going to be some more fallout from
what has been announced," said Credit Suisse analyst Tom
Kendall. "Clearly this is contributing to the bearishness on
the U.S. dollar, and that is bullish for all commodities, not
just gold."
Currency analysts are waiting to see what the broader
implications of the Fed's move will be in what is still a heavy
news week on the macroeconomic front.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For Reuters report on implications of quantitative easing:
http://r.reuters.com/cyh73q
Graphic showing relationship of QE2, interest rates, gold
and dollar: http://r.reuters.com/dux73q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
WEAK DOLLAR BOOSTS COMMODITIES
The U.S. dollar slumped on Thursday, hitting a 28-year low
against the Australian currency and a more than nine-month
trough against the euro, as a Federal Reserve decision to buy
more Treasuries pushed U.S. yields lower and prompted investors
to seek returns elsewhere.
The Fed's commitment to open-ended purchases of Treasuries,
implying low funding costs, brings into focus an expected
increased use of the dollar in carry trades in which the U.S.
dollar is used to fund purchases in commodities, emerging
markets and higher-yielding currencies. []
On the physical side of the gold market, Indian demand was
strong because of the Hindu festivals of the Dhanteras, which
celebrates prosperity, and the Diwali festival of light.
Silver <XAG=> rose to a 30-year high at $26.26 an ounce,
tracking gains in gold. It was up 5.6 percent at $26.19 at last
trade.
Palladium rallied to its strongest since May 2001, lifted
by strength in gold and expectations its underlying
fundamentals will improve as demand from automakers recovers
and supply struggles to keep pace.
Palladium <XPD=> peaked at $679.50 an ounce and traded up
4.4 percent at $678.97 an ounce.
Platinum <XPT=> rose to a two-year high at $1,788.74 an
ounce and it climbed 4.5 percent to $1,747.74 an ounce at
last.
Prices at 4:24 p.m. EDT (2024 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1383.10 45.50 3.4% 26.2%
US silver <SIZ0> 26.043 1.607 0.1% 54.6%
US platinum <PLF1> 1755.90 58.70 3.5% 19.4%
US palladium <PAZ0> 674.75 32.05 5.0% 65.0%
Gold <XAU=> 1392.05 44.90 3.3% 27.0%
Silver <XAG=> 26.17 1.37 5.5% 55.4%
Platinum <XPT=> 1778.99 75.99 4.5% 21.4%
Palladium <XPD=> 678.72 35.00 5.4% 67.4%
Gold Fix <XAUFIX=> 1381.00 20.00 1.5% 25.1%
Silver Fix <XAGFIX=> 25.38 38.00 1.5% 49.4%
Platinum Fix <XPTFIX=> 1740.00 1.00 0.1% 18.7%
Palladium Fix <XPDFIX=> 668.00 1.00 0.1% 66.2%
(Additional reporting by Amanda Cooper in London; Editing by
Walter Bagley)
