* Inflation worries from QE2 boost gold's appeal
* Silver hits 30-year peak, palladium hits 9-year high
* Coming up: U.S. wholesale inventory data Tuesday
(Recasts, adds comments, updates prices to market close,
changes byline, moves dateline from LONDON)
By Frank Tang
NEW YORK, Nov 5 (Reuters) - Gold prices rose to an all-time
high within a few dollars of $1,400 an ounce on Friday as the
U.S. Federal Reserve's program to resume buying government
bonds stoked inflation worries.
The metal was up nearly 3 percent for the week, its
strongest weekly close since May, Reuters data showed.
Gold's rally to a record came despite the fact that the
dollar was up almost 1 percent on the day, boosted by a U.S.
nonfarm payrolls report that suggested the economy may be on a
stable road to recovery. [] []
"Bullion investors are ignoring what the dollar is doing
right now and looking more at what the Fed is doing, knowing
it's inflationary for the market regardless of what it does,"
said Jeff Pritchard, a broker at Altavest Trading.
"At some point, there is no way that inflation won't be an
issue. Right now, if you want a return on your money, the
commodity and stock markets seem to be the place," he said.
Spot gold <XAU=> rose 0.2 percent to $1,394.30 an ounce at
3:35 p.m. EDT (1935 GMT), having earlier hit a record of
$1,397.80. U.S. gold futures for December delivery <GCZ0>
settled up $14.60, or 1.1 percent, at $1,397.70.
Tom Kendall, an analyst at Credit Suisse, said that gold's
rise in the face of a strong dollar showed strong support to
buy gold.
"There're 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," Kendall said.
The dollar soared on Friday after data showed U.S.
employers added 151,000 jobs in October, blowing past
expectations of a 60,000 rise and marking the fastest pace of
hiring since April. []
The report came two days after the Fed committed to inject
$600 billion to boost the flagging recovery and left some
investors open to the possibility that the dollar may have
carved a bottom against its biggest rivals, despite the
prospect of more monetary easing.
The inverse link between gold and the dollar weakened on
Friday, even though the relationship had tightened after the
Fed announcement, with the hourly correlation between the two
easing to 0.57 from Thursday's peak of 0.66.
Gold had its biggest one-day rise in about six months on
Thursday.
"The key implication of the QE (Fed 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.
Policymakers from the world's new economic powerhouses in
Asia criticized 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 precious metals, silver <XAG=> rallied to a new
30-year high on the rising gold prices, while palladium <XPD=>
rose to a fresh nine-year high.
Silver <XAG=> set a 30-year high of $26.89 an ounce. It was
trading up 1.2 percent at $26.65.
Palladium <XPD=> peaked at $697 an ounce and was later 0.3
percent at $683. Platinum <XPT=> slipped 1.1 percent to
$1,761.49.
Prices at 3:32 p.m. EDT (1932 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1397.70 14.60 1.1% 27.5%
US silver <SIZ0> 26.748 0.705 0.0% 58.8%
US platinum <PLF1> 1768.90 13.00 0.7% 20.3%
US palladium <PAZ0> 685.40 10.65 1.6% 67.6%
Gold <XAU=> 1394.55 2.14 0.2% 27.2%
Silver <XAG=> 26.66 0.33 1.3% 58.3%
Platinum <XPT=> 1760.50 -20.50 -1.2% 20.1%
Palladium <XPD=> 682.22 1.72 0.3% 68.2%
Gold Fix <XAUFIX=> 1395.50 11.25 0.8% 26.4%
Silver Fix <XAGFIX=> 26.14 76.00 3.0% 53.9%
Platinum Fix <XPTFIX=> 1764.00 4.00 0.2% 20.3%
Palladium Fix <XPDFIX=> 687.00 9.00 1.3% 70.9%
(Additional reporting by Michael Taylor and Maytaal Angel in
London; Editing by Walter Bagley)
