* Technical momentum builds after Indian gold acquisition
* Dollar weakens ahead of Fed, adding to upward pressure
* Palladium up 2 pct, lifted by U.S. car sales, China buying
(Updates prices, adds detail, comment)
By Jan Harvey
LONDON, Nov 4 (Reuters) - Gold hit record highs above $1,095
an ounce on Wednesday as dollar weakness added to momentum lent
to the market by India's purchase of 200 tonnes of gold from the
IMF to push prices through key technical resistance levels.
Gold is now poised to target the psychological $1,100 an
ounce level, dealers said. For graphic on gold's rise, click on:
http://graphics.thomsonreuters.com/109/GLD/GLD_TMLN1009.html.
Spot gold struck a high of $1,095.05 an ounce and was bid at
$1,090.40 an ounce at 1204 GMT, against $1,084.50 late in New
York on Tuesday.
"At the moment, there is technical buying on the back of
yesterday's rally in the aftermath of the IMF/India
transaction," said Alexander Zumpfe, a trader at Heraeus.
"The transaction... reduced the amount of gold that can be
sold under the CBGA by 50 percent for the first year.
Technically, it is looking good and it seems like the market
wants to test $1,100 now," he added.
The IMF said on Tuesday it had sold 200 tonnes of gold to
the Reserve Bank of India, half of a long-planned bullion sale
that had threatened to slow gold's ascent. []
Market watchers are now speculating over the destination of
the remaining 403 tonnes of gold the IMF has to sell.
"(The) implication is that at least one other central bank
may be negotiating to buy gold from the IMF," John Meyer, an
analyst at Fairfax, said in a note.
Weakness in the dollar in early European trade has added to
this momentum, dealers said. The dollar index <.DXY> retreated
from a one-month high on Wednesday as traders braced for a
policy decision from the Federal Reserve. []
Gold's ability to reach record highs despite dollar strength
on Tuesday has cheered the market, traders say.
"For the first time in a while gold rallied without the
influence of the dollar, which is very bullish," said Afshin
Nabavi, head of trading at MKS Finance.
EXPENSIVE
Gold typically moves in the opposite direction to the
dollar. Strength in the U.S. unit makes gold, like all
dollar-priced commodities, more expensive for holders of other
currencies, and cuts its appeal as an alternative asset.
U.S. gold futures on the COMEX division of the New York
Mercantile Exchange also hit record highs at $1,096.20 an ounce.
Spot gold prices also rose to an 8-month peak in euro terms
<XAUEUR=R> of 741.77 euros, and hit their highest since early
June when denominated in Australian dollars, at A$1,206.74.
Demand for physical gold showed some signs of life, with
holdings of the largest bullion exchange-traded fund, New York's
SPDR Gold Trust <GLD>, rising nearly 5 tonnes. []
However, gold buying in India, the world's biggest bullion
consumer last year, was weak as India gold futures also hit
record highs, while dealers reported a rise in scrap sales as
consumers took advantage of higher prices. []
Among other precious metals, spot silver <XAG=> was bid at
$17.43 an ounce against $17.20, tracking gold. Platinum <XPT=>
was at $1,358.50 an ounce against $1,355.50.
Palladium <XPD=> was the biggest percentage climber of the
precious metals, rising 2 percent to a peak of $331.50 after
stronger than expected U.S. car sales numbers late on Tuesday,
before retreating to $329.50 against $324.50. []
The metal is benefiting from expectations industrial demand
for the autocatalyst material may pick up as car buying recovers
in the United States and China, dealers said.
"We continue to see good demand all over for palladium -
this is evident in export patterns out of Switzerland," said
Standard Bank analyst Walter De Wet. "China is the main
destination."
(Editing by Sue Thomas)
