* Gold hits second record in a row as dollar slides
* Ongoing unrest in Mideast, inflation worry add momentum
* Silver jumps to highest since early 1980, options eyed
* Coming up: GFMS silver survey on Thursday
(Recasts, updates prices, market activity; adds graphic
link, adds second byline, dateline, previously LONDON)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, April 6 (Reuters) - Gold rose to an
all-time high for a second straight day on Wednesday, as the
U.S. dollar weakened ahead of an expected interest rate hike
from the European Central Bank (ECB).
Silver also surged to a 31-year high for a third
consecutive day as holdings of the world's largest silver ETF
hit a record. Inflation fears have boosted precious metals, as
crude oil and corn prices hovered near new peaks.
On the silver options front, heavy trading of bullish
strategies such as call spreads buying and puts selling
indicate the metal is building momentum for another upward
move.
"It is unquestionable that the demand for precious metals
derives from the devaluation of the leading currencies -- the
dollar, the pound and the euro," said Angelos Damaskos, a fund
manager at Sector Investment Managers.
Spot gold <XAU=> hit a record $1,461.91 an ounce and was
later up 0.3 percent at $1,455.34 an ounce by 12:33 p.m. EDT
(1633 GMT). U.S. gold futures for June delivery <GCM1> rose 0.3
percent to $1,456.90.
Gold remains far below its all-time inflation-adjusted
high, estimated at almost $2,500 an ounce. (Graphic:
http://r.reuters.com/ren88r )
Gold drew support as the euro climbed against the dollar to
its highest in more than a year. The ECB is widely expected to
raise its benchmark rate 25 basis points on Thursday. Higher
interest rates usually weigh on gold, but the metal could gain
if rate differentials weaken the U.S. dollar.
The traditional inverse correlation between gold and the
dollar appeared to be strengthening this week as gold rose to
successive records, but the link between the two could remain
erratic in the near term. (Graphic:
http://link.reuters.com/nun88r)
Strong investment demand drove silver up more than 1
percent to a 31-year high of $39.75 -- its highest level since
January 1980, when the Hunt Brothers corned the market. It
<XAG=> eased off that session high to trade at $39.35 an ounce,
up 0.3 percent.
"Either way, you are going to see a significant move from
here. Even though we were up this much, I think you are going
to see an even bigger move," said COMEX gold and silver options
floor trader Dominick Cognata.
Holdings of silver in the iShares Silver Trust <SLV> ETF
are at a record 11,162.45 tonnes, up more than 240 tonnes so
far this year.
Reflecting the pick-up in investor demand for gold was the
first inflow of metal since March 16 into the SPDR Gold Trust
<GLD>. []
Investors remained focused on Thursday's three central bank
policy meetings. The ECB is seen as almost certain to raise
rates, while the Bank of Japan and the Bank of England are
expected to hold rates steady. []
For platinum group metals, spot platinum <XPT=> rose 0.8
percent to $1,800.74 an ounce, while palladium <XPD=> inched up
14 cents to $786.52.
Prices at 12:33 p.m. EDT (1633 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCM1> 1456.90 4.40 0.3% 2.5%
US silver <SIK1> 39.380 0.192 0.5% 27.3%
US platinum <PLN1> 1807.90 11.10 0.6% 1.7%
US palladium <PAM1> 789.90 -3.20 -0.4% -1.7%
Gold <XAU=> 1455.34 4.74 0.3% 2.5%
Silver <XAG=> 39.35 0.12 0.3% 27.5%
Platinum <XPT=> 1800.74 14.99 0.8% 1.9%
Palladium <XPD=> 786.52 0.14 0.0% -1.6%
Gold Fix <XAUFIX=> 1461.50 4.50 0.3% 3.6%
Silver Fix <XAGFIX=> 39.63 155.00 4.1% 29.4%
Platinum Fix <XPTFIX=> 1808.00 12.00 0.7% 4.4%
Palladium Fix <XPDFIX=> 793.50 6.50 0.8% 0.3%
(Additional reporting by Jan Harvey in London; Editing by
David Gregorio)
