* Dollar extends losses versus euro after U.S. data
* GM makes amended offer to bondholders
(Releads, updates prices)
By Jan Harvey
LONDON, May 28 (Reuters) - Gold rose to a new two-month high
of $964.95 an ounce on Thursday as the dollar lost more ground
against the euro, while silver hit a fresh 9-month peak.
Spot gold <XAU=> was bid at $964.75 an ounce at 1533 GMT,
against $948.10 an ounce late in New York on Wednesday. U.S.
gold futures for June delivery <GCM9> on the COMEX division of
the New York Mercantile Exchange rose $11.20 to $964.50.
Silver <XAG=> hit a high of $15.25 an ounce, its firmest
since August 2008, and was later at $15.24 an ounce against
$14.72.
"Platinum and palladium are following gold, silver is
putting in a great performance above $15 and the euro is clearly
up," said Gerry Schubert, head of precious metals at INTL
Commodities.
"The weak long positions have been taken out of the gold
market," he added. "What you see is good quality buying, and for
the first time this month we are seeing physical buying out of
Turkey and Middle East."
The euro firmed against the dollar on Thursday, reversing
earlier losses that saw the single currency touch a one-week low
of $1.3793 earlier in the session. The U.S. currency
strengthened, however, against the yen. []
Reports in the U.S. showed better-than-expected readings on
durable goods orders and weekly jobless claims, boosting risk
appetite and hurting the dollar versus the single currency.
Gold has recently re-established its close negative
correlation with the U.S. currency after the relationship
weakened earlier this year, as risk aversion took the driving
seat in both the bullion and currency markets. []
Stock market weakness is still holding gold above key
support at $940 an ounce. Global stocks fell from 2009 highs as
concerns grew rising U.S. debt yields could push up borrowing
costs and arrest a recovery. []
INFLATION PROSPECTS
The prospect of rising inflation in the longer term is also
likely to support gold, a key hedge against rising prices.
Investor demand for the metal remains relatively soft after
the heavy buying seen in early 2009. Holdings of the main gold
exchange-traded fund, the SPDR Gold Trust <GLD>, were unchanged,
albeit near record levels, for a third straight session.
Holdings of a much smaller ETF operated by Swiss bank Julius
Baer <BAER.VX> are expected to rise to a record 1.599 million
ounces by Friday, however. []
In India, the world's biggest bullion buyer, demand was firm
despite high prices as the wedding season got underway. During
the season, which lasts until June, parents give gold jewellery
as a wedding gift for financial security. []
Among other precious metals, platinum <XPT=> was quoted at
$1,143.50 an ounce against $1,131.50 late in New York on
Wednesday, while palladium <XPD=> was at $225 against $222.
Platinum is being pressured by fears over the demand
outlook, especially from the ailing auto sector, which typically
consumes half of the world's annual output of the white metal.
General Motors <GM.N> made an improved equity exchange offer
to bondholders with $27 billion in debt intended to pave the way
for a quick bankruptcy process. Under the proposed deal, the
U.S. Treasury will hold 72.5 percent of the new GM coming out of
a bankruptcy sale process. []
"GM seems set for bankruptcy and this is keeping investors
cautious on platinum and palladium, hence the currently low
platinum/gold ratio of 1.19," said UBS analyst John Reade in a
note.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
