(Adds comments, updates prices)
By Miho Yoshikawa
TOKYO, March 17 (Reuters) - Gold prices shot up more than 3
percent on Monday to hit fresh record highs as investors stepped
up buying of the yellow metal, whose lustre has increased due to
the dollar's weakness and deepening U.S. financial woes.
JPMorgan Chase & Co <JPM.N> said on Sunday it would acquire
stricken rival Bear Stearns <BSC.N> for just $2 a share in an
all-stock deal that values the U.S. investment bank at about $236
million.
The news sent the dollar tumbling to a record low against the
euro as investors worried that there would be more casualties in
the widening U.S. financial crisis.
The Fed cut its discount rate on Sunday and launched a new
discount window facility for primary dealers.
"This morning's moves by the Fed clearly tells how serious
the situation is in the United States. Gold is drawing a lot of
safe-haven demand as you can't buy stocks or currencies because
of this volatility," said Shuji Sugata, manager at Mitsubishi
Corp Futures and Securities Ltd.
Gold's attraction as an alternative investment has helped
boost the precious metal's price by more than 20 percent this
year alone, as it hit successive record highs along the way.
It gained 32 percent in 2007.
"Flight-to-quality buying is boosting gold as the market is
losing faith in the dollar," said Tatsuo Kageyama, analyst at
Kanetsu Asset Management in Tokyo.
Gold hit $850 an ounce in January 1980, lifted by a
combination of high inflation linked to strong oil prices, the
Soviet intervention in Afghanistan and the impact of the Iranian
revolution.
After adjustment for inflation, the 1980 high is equivalent
to $2,119.30 an ounce at 2007 prices, according to precious
metals consultancy GFMS Ltd.
As of 0315 GMT, spot gold <XAU=> has so far risen as high as
$1,030.80 per ounce, up more than 3 percent from Friday when it
hit a record $1,007.10.
It was at $996.90/997.70 late on Friday in New York.
Gold was expected to head even higher as the dollar deepened
its slide against both the euro and the yen.
"The market is completely bearish on the dollar. The market
is also very pessimistic about the dollar's outlook," Kageyama
said.
The dollar plunged 3 percent against the yen on Monday to hit
a 13-year low below 96 yen on fears that there would be other
casualties to the fast-spreading credit crisis that claimed U.S.
investment bank Bear Stearns.
The euro vaulted to a $1.5905 <EUR=>, up 1.5 percent on the
day.
"Probably gold is the only decent asset you can hold. You
simply cannot go short in gold now," Mitsubishi's Sugata said.
The most active gold contract for April delivery <GCJ8> on
the Comex division of the New York Mercantile Exchange rose as
high as $1,033.90 per ounce, up more than 3 percent from its New
York close of $999.50, when it climbed $5.70.
It marked a record high of $1,009 on Friday.
The key February 2009 gold contract on the Tokyo Commodity
Exchange <0#JAU:> closed the morning session down 7 yen, or 0.2
percent, at 3,231 yen per gram, pressured by the strong yen.
Platinum <XPT=> rose to $2,104/2,114 an ounce, compared with
$2,070/2,080 late in New York on Friday.
Palladium <XPD=> inched down to $507.00/512.0 an ounce
compared with $509/514.
Silver <XAG=> climbed to $21.09/21.14 an ounce from
$20.64/20.69 late in New York.
Precious metals prices at 0322 GMT
Last Net Change Pct Move Turnover (lots)
TOCOM Gold 3231.00 -7.00 -0.22 38759
TOCOM Platinum 6396.00 -173.00 -2.63 9153
TOCOM Silver 666.90 -5.10 -0.76 926
TOCOM Palladium 1616.00 -60.00 -3.58 3393
Spot Gold 1025.70
Spot Platinum 2104.00
Spot Silver 21.12
Spot Palladium 507.00
Euro/Dollar $1.5863
Dollar/Yen 096.39
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Reporting by Miho Yoshikawa and Chikafumi Hodo)
