* Investors buy the dips, bet the dollar will fall more
* Inflation worries from QE2 boost gold's appeal
* Silver hits 30-year peak, palladium hits 9-year high
(Recasts, updates prices, adds detail/comment)
By Michael Taylor and Maytaal Angel
LONDON, Nov 5 (Reuters) - Gold hit a fresh record above
$1,397 an ounce on Friday as investors went bargain-hunting,
betting the U.S. Federal Reserve move to buy more government
bonds will spur inflation and weaken the dollar going forward.
Spot gold <XAU=> traded at $1,394.10 an ounce at 1518 GMT,
against $1,392.25 late in New York on Thursday, having earlier
hit a record of $1,397.80. U.S. gold futures for December
delivery <GCZ0> traded up $11.60 at $1,394.70.
The move to a new record came despite the fact that the
dollar was up on the day, boosted by a U.S. nonfarm payrolls
report that suggested the economy may be on a stable road to
recovery. [] []
A strong dollar usually weighs on gold by denting its appeal
as an alternative to paper currencies.
"This illustrates just how much support there is on the long
side for gold," said Tom Kendall, an analyst at Credit Suisse.
"There's lots of ways the Fed statement impacts gold. One is
inflation expectations, secondly what happens to the U.S.
dollar. (Also) the commodities complex has been lifted by this
action as it accelerates this trend of money looking for returns
from emerging markets and hard assets."
Gold had its biggest one-day rise in about six months on
Thursday, the day after the Fed pledged a fresh effort to
support a struggling U.S. economy by pumping in over half a
trillion dollars, undermining the dollar and stoking fears over
longer-term inflation. []
"The key implication of the QE (quantitative easing)
measures is that major currencies -- particularly the U.S.
dollar -- are likely to lose value relative to 'alternative'
currencies such as gold," said David Thurtell, an analyst at
Citi.
"Gold's traditional disadvantage, no yield, is largely
reduced in a zero interest rate world," he added. "But its major
advantage, limited supply, is massively enhanced, as central
banks expand the paper money supply with further QE."
Policymakers from the world's new economic powerhouses in
Asia criticised the Fed's move to inject billions of dollars
into the U.S. economy, saying it made any substantive deal on
cutting global economic imbalances less likely at next week's
Group of 20 meeting in Seoul. []
Among other metals, silver <XAG=> hit a new 30-year high to
catch up with gold prices, while palladium <XPD=> rose to a
fresh nine-year high.
Silver <XAG=> hit $26.89 an ounce but was last traded at
$26.74 against $26.33.
Palladium <XPD=> peaked at $697 an ounce and was later at
$690 against $680.50 late on Thursday. Platinum <XPT=> was
traded at $1,762.15 an ounce against $1,781.
(Editing by Jane Baird)
