(recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, Feb 29 (Reuters) - Gold set an historic high above
$975 on Friday, propelled by speculative buying on the back of
record high oil and a lifetime low dollar against the euro.
Silver jumped to a 27-year peak near $20 an ounce, palladium
surged nearly 4 percent to its highest in more than six years
and platinum rebounded from lows to hover near a lifetime high.
Gold <XAU=> set a record for the third straight day, hitting
$975.90 an ounce before easing to $968.50/969.40 at 1129 GMT. It
closed at $968.90/969.70 in New York on Thursday. Gold has risen
16 percent this year on the top of 32 percent rise in 2007.
"It looks very likely that we will go above $1,000," Michael
Lewis, global head of commodities research at Deutsche Bank said
in London.
"The next focus is the degree of Fed easing at the next FOMC
meeting on March 18. So that would be another possibility that
we would start to see dollar weakness accelerating," he said,
referring to the U.S. Federal Open Market Committee.
"There is a non-linear relationship between gold and the
dollar, whereby incremental weakening in the dollar has a bigger
impact on the gold prices," he added.
The dollar hit record lows against the euro, Swiss franc and
a basket of major currencies, weighed down by worries about the
U.S. economy and expectations of further aggressive rate cuts.
A surprisingly large rise in weekly U.S. jobless claims on
Thursday and confirmation the world's biggest economy barely
grew in the final quarter of 2007 fuelled recession fears.
A rate cut tends to weaken the dollar as investors shift
from to other assets for better returns. A weaker dollar makes
gold cheaper for other currency holders and lifts metal demand.
Gold is also seen as a hedge against oil-led inflation.
Oil hit a record peak above $103 a barrel, fuelled by fund
money chasing commodities as the U.S. dollar sank and worries
mount about supply disruptions.
"While gold's movements over the past 24 hours have pushed
the metal back into overbought territory, its does appear that
the scale of demand is sufficient to propel gold to $1,000/oz,"
said James Moore, metals analyst at TheBullionDesk.com.
U.S. DATA AWAITED
While oil is at a record price in inflation-adjusted as well
nominal terms, gold has been lagging. According to analysts at
metals consultancy GFMS Ltd, gold's inflation-adjusted record
high is more than $2,000 an ounce at current prices.
"Another set of weak U.S. economic data is expected to be
released today. Thus, the market is likely to price in further
U.S. rate cuts and fears that rising inflation would be the
result of easier monetary policy," Dresdner Kleinwort said.
"Nevertheless, weaker U.S. economic figures are probably
positive for gold, which might rise to a fresh record high. The
magic $1,000 level is getting closer in sight."
Investors await personal income and consumption data at 1330
GMT. The National Association of Purchasing Management, Chicago,
releases February index of manufacturing activity at 1445 GMT.
In market news, the Shanghai Gold Exchange, China's largest
precious metals bourse, will ease rules for foreign banks
seeking membership, an exchange source said. []
In other metals, silver <XAG=> rose to $19.92 an ounce and
was last at $19.69/19.74, versus $19.74/19.79 in New York.
Platinum <XPT=> rose to a high of $2,161 an ounce and was
last at $2,153/2,163, versus $2,135/2,140 on Thursday and last
week's record of $2,192.
Platinum, used in jewellery and auto catalysts, has jumped
more than 40 percent this year after mines in South Africa,
accounting for 80 percent of world output, were shut for five
days at the height of last month's power crisis.
Palladium <XPD=> hit a high of $582 an ounce before falling
to $561/566, against $560.00/564.00 late in New York.
(Reporting by Atul Prakash; editing by Michael Roddy)
