* Gold supported as stocks fall despite cenbank actions
* Gold rises to record high in euro terms
* Dollar extends losses after Federal Reserve action
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Oct 7 (Reuters) - Gold prices jumped more
than 3 percent on Tuesday as stocks kept sliding as central
banks around the world took more drastic measures to boost
financial markets.
Gold also hit a new all-time high in euro terms, according
to Reuters data, as fears over the outlook for the financial
sector spurred buying, and as the dollar weakened against the
euro.
Rising oil prices and widespread gains in all commodities
were also underpinning gains. Broad-based commodity index
Reuters/Jefferies CRB index <.CRB> rose 1 percent.
Spot gold <XAU=> rose to a session high of $890.60, and was
at $885.25/888.25 an ounce at 2:53 p.m. EDT (1853 GMT), up 3.2
percent from $857.45 an ounce, its Monday nominal close.
The gold contract for December delivery <GCZ8> settled up
$15.80, or 1.8 percent, at $882.00 an ounce on the COMEX
division of the New York Mercantile Exchange.
The U.S. Federal Reserve said it was creating a
special-purpose facility to buy commercial paper, in an
emergency move designed to calm chaotic financial markets.
[]
Rising investment interest in gold amid a financial crisis
could be seen in increased buying of gold coins and bars.
The U.S. Mint said "unprecedented" demand for precious
metals and volatile markets forced it to cease production of
some American Eagle gold coins for the rest of this year.
[]
"We are seeing that physical demand remained strong. It's
the same story that has been supporting prices all along, as
economic and political concerns continued to support prices
higher," said CPM Group analyst Carlos Sanchez.
U.S. stocks were sharply lower, with the broad-based
Standard and Poor's 500 index <.SPX> down 4 percent.
In euro terms, gold rose to a record 654.22 euros an ounce,
up from 635.29 euros late on Monday.
"Gold's strength has been masked by the dollar," VM Group
analyst Matthew Turner said. "The price today in euros is at an
all-time high. Coin sales have been soaring and ETF demand is
strong. There is a lot of demand out there for gold."
Firmer oil prices also supported gold. U.S. crude futures
<CLc1> ended $2.25 higher at $90.06 per barrel. []
An early spike in oil prices on reports that a U.S.
warplane violated Iran's territory sent gold to session highs.
However, both oil and gold retreated when Iranian state
television later said the plane was Hungarian, with no U.S.
military officials aboard. []
The dollar, a key external driver of gold, extended losses
against the euro after steps from the Federal Reserve to
backstop the U.S. commercial paper market boosted risk
appetite. []
Gold typically moves in the opposite direction to the
dollar, as it is often bought as an alternative investment to
the U.S. currency.
MACRO SUPPORT
Support for gold prices from the rocky economic situation
looked set to remain firm, analysts said, with prices
potentially climbing further, if the outlook worsens.
"Given the uncertainty and risk that is being generated in
the financial markets, it looks very likely that more
institutional safe-haven buying might enter the arena, pushing
prices to new highs," said ScotiaMocatta analysts.
Platinum and palladium prices also rose, with platinum
returning to the $1,000-an-ounce level for the first time in
three sessions.
Platinum <XPT=> was quoted at $1,005.50/1,025.50, up from
$961.50, its Monday New York close. Palladium <XPD=> was at
$192.50/200.50 an ounce, up from its Monday nominal close of
$194.
Among other precious metals, silver <XAG=> was at
$11.46/11.56 an ounce. Late in New York on Monday it was quoted
at $11.01 an ounce.
(Editing by Walter Bagley)
