* Dollar slides to 8-1/2 month low vs currency basket
* Markets eye U.S. data for pointers to more monetary easing
* SPDR gold ETF records third straight outflow
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 5 (Reuters) - Gold rallied to record highs above
$1,325 an ounce in Europe on Tuesday as the dollar slipped
sharply against the euro, with recent volatility in the currency
markets boosting demand for the metal as a safe store of value.
Spot gold <XAU=> hit a high of $1,328.05 an ounce and was
bid at $1,325.50 an ounce at 0938 GMT, against $1,315.20 late in
New York on Monday. U.S. gold futures for December delivery
<GCZ0> rose $10.00 an ounce to $1,326.80.
Gold prices appreciated as the dollar <.DXY> tumbled to an
8-1/2 month low against a basket of six major currencies,
pressured by broad-based demand for the euro. []
Gold is sensitive to moves in the dollar, as weakness in the
U.S. unit tends to lift gold's appeal as an alternative asset
and makes dollar-priced commodities cheaper for other currency
holders.
"This morning it is a dollar-related move, but it is also
the wider currency issues that have been highlighted by an
increasing number of commentators," said Tom Kendall, an analyst
at Credit Suisse.
"This morning it was the turn of the Institute of
International Finance to talk about currency tensions and the
need for some agreement on how to manage pressures between the
major currency pairs."
"You have also had Trichet and Mr Juncker talking about the
Chinese renminbi not having appreciated as fast as they would
have liked to have seen," he added. "All of this tension within
the forex world is what is playing into gold."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Comments by euro zone economic policymakers: []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Gold hit all-time highs in six consecutive sessions to
Friday, and after building a base above $1,310 an ounce on
Monday rose nearly 1 percent to a new record early on Tuesday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on gold performance vs other commodities:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Analysts will be watching U.S. data later in the week, mainly
non-farm payrolls numbers due on Friday, for clues on the next
move in the dollar. Weak data has raised expectations the Fed
will take steps to boost the flagging U.S. economy.
FURTHER EASING EYED
"According to monetary theory, with interest rates at or
near historical lows across the OECD world, further easing in
monetary policy must take the form of liquidity injections,
rather than interest rate reductions," HSBC analyst James Steel
saiin a note.
"In the case of the United States, if increased U.S. dollar
liquidity leads to a decline in the dollar, then gold is likely
to be a beneficiary."
Demand for physical gold retreated as prices rose again,
however. Buying in main gold consumer India was muted as the
weaker rupee added to pressure on local buyers. []
"As (jewellery demand) clearly weakens at the high price
level, the dependence on investment demand rises and this is
still relatively robust even if the world's largest gold ETF,
SPDR Gold Trust, reported slight outflows again yesterday," said
Commerzbank in a note.
"Net long positions of speculative financial investors
recently rose to a 12-month high. A sharper fall in prices is
not on the cards, as gold should profit from the prospect of
quantitative easing and as a stable alternative currency."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters Insider interview with Investec Asset Management's
Michael Power on gold: http://link.reuters.com/bej86p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, declined for a third
session, while those of the largest silver ETF, the iShares
Silver Trust <SLV> dipped from record highs. []
Silver <XAG=> was at $22.20 an ounce against $21.97, having
earlier hit a 30-year high at $22.25 an ounce. Silver continued
to outperform gold, with the number of ounces of silver needed
to buy an ounce of gold slipping to a one-year low at 59.72.
Platinum <XPT=> was at $1,678.50 an ounce against $1,664.85,
while palladium <XPD=> was at $563 against $557.83.
(Editing by Sue Thomas)
