* Gold price highest since Oct. 10 on safe-haven buying
* Bullion hits all-time highs in euro, sterling terms
* SPDR Gold Trust holdings hit record for 4th day in row
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Jan 23 (Reuters) - Gold rallied 5 percent
on Friday, briefly breaking above the $900 an ounce level as
volatile currency markets and solid investment demand spurred
bullion buying.
The precious metal reached record highs in both sterling
and euro terms, signaling bullion's strength against not only
the U.S. dollar but also currencies across the board.
"I think that people are coming to the new year realizing
that the financial crisis is going to last longer than they had
expected," said Caesar Bryan, portfolio manager of GAMCO Gold
Fund.
Bryan, who manages $350 million in fund assets, said that
more nervous investors were turning to gold because of high
volatility in the foreign exchange market.
Spot gold <XAU=> rose as high as $902.50 an ounce, which
was the loftiest price since Oct. 10. It was at $895.80 an
ounce at 2:19 p.m. EST (1919 GMT), up 4.7 percent from
Thursday's last trade of $855.50.
It rose to an all-time high of 700.37 in euro terms
<XAUEUR=R>, and a record 659.71 pounds when priced in sterling
<XAUGBP=R>.
U.S. gold futures for February delivery <GCG9> settled up
$37.00, or 4.3 percent, at $895.80 an ounce on the COMEX
division of the New York Mercantile Exchange.
"There is ongoing nervousness in the market about the
banking sector," said Tom Kendall, precious metals strategist
at Mitsubishi. "If you are looking to park your cash...there
are not many options around and gold is one option."
The dollar climbed to a 23-year high against sterling and a
six-week high against the euro as weak UK and euro zone data
and worries about the global economy kept investors risk
averse. []
"Investors are getting out of currencies and getting into
gold," said Simon Weeks, director of precious metals at the
Bank of Nova Scotia.
While strength in the dollar against the euro tends to
weigh on gold, which is often bought as a hedge against
weakness in the U.S. currency, this correlation was trumped by
interest in bullion as a safe haven.
"The relationship between gold and the U.S. dollar appears
to be broken at present," said Fairfax analyst John Meyer.
"Normally a stronger dollar pushes down gold."
"Clearly there is investment money flooding in due to the
perceived security of gold," he said.
ETF HITS RECORD
Demand for investment products such as coins and bars and
physically backed vehicles such as exchange-traded funds has
been strong this week.
The world's largest bullion-backed exchange-traded fund,
New York's SPDR Gold Trust, said its holdings rose to a record
for the fourth consecutive session on Thursday, climbing 1.6
percent or 13.15 tonnes to a 819.11 tonnes. []
SPDR took over from the Bank of Japan as the world's
seventh largest holder of gold in December.
Patricia Mohr, vice president, economics & commodity market
specialist at the Scotiabank Group, said gold ETFs were popular
with retail investors because of their accessibility as well as
to institutional investors who are using gold as a hedge
against potential dollar weakness later this year.
Among other precious metals, silver <XAG=> was at $11.89 an
ounce, up 4.5 percent from its previous session close of $11.38
late in New York on Thursday.
Platinum <XPT=> traded at $956.50 an ounce, up 3.3 percent
from its last finish of $926, while palladium <XPD=> was quoted
at $189.00 an ounce, up 3.9 percent from its previous close of
$182 on Thursday.
(Additional reporting by Humeyra Pamuk in London; editing by
Jim Marshall)
