* Gold touches two-week high near $1,125/oz
* Gold miners target higher output in 2010
* Reuters FX surveys []
(Recasts, adds comment/detail)
By Jan Harvey and Pratima Desai
LONDON, Feb 3 (Reuters) - Gold acquired a softer tone on
Wednesday, alongside other commodities as the dollar held firm
against the euro, but analysts see a bright outlook for the
precious metals.
Spot gold <XAU=> had hit a peak of $1,124.45, the highest
since January 20 but was then bid at $1,112.70 an ounce at 1549
GMT, against $1,113.95 late on Tuesday. U.S. gold futures for
February delivery <GCG0> were down $5.3 to $1,112.1 an ounce.
"The correlation between gold and other key commodities is
very high at the moment, they are all trading together," said
Jesper Dannesboe, commodity strategist at Societe Generale.
For some years now the weaker dollar <.DXY> has helped boost
gold, which is used as an alternative currency and as a hedge
against financial turbulence and inflation pressures. []
But some analysts now think the dollar has troughed and they
expect a firmer dollar to weigh on commodities.
"The relationship is breaking down, commodities will
increasingly trade on fundamentals and investor flows, not the
dollar," Dannesboe said.
But gold prices have reacted negatively in recent weeks to
any talk suggesting that U.S. monetary policy could be tightened.
Higher U.S. interest rates could dent the appeal of gold as a
non-interest bearing asset.
Earlier on Wednesday, gold prices fell as the dollar firmed
after news of U.S. private job creation. []
"Maybe people think the number suggests that payrolls will
be pretty good," said David Thurtell, analyst at Citigroup.
"That raises the prospect of a view that the Fed will think
things are picking up and eventually tighten policy.
ON THE RADAR
Traders are waiting for key U.S. non-farm payrolls data and
interest rate decisions from the European Central Bank and the
Bank of England due later this week.
"Much will depend on how the market reacts to macro data
later in the week and if risk sentiment improves across the
board," said Andrey Kryuchenkov, an analyst at VTB Capital.
"Gold is still trading alongside other metals and equity
markets... in an opposite direction to the U.S. currency."
On the investment side, holdings of the world's largest gold
exchange-traded fund, the SPDR Gold Trust <GLD>, were unchanged
for a tenth session after outflows of 21.7 tonnes in January.
On the supply side, Australia's third largest gold miner,
Resolute Mining <RSG.AX>, said it would expand gold output by a
quarter within the next three years to 500,000 ounces. Australia
is the world's number four gold producer. []
Toronto-based Iamgold <IMG.TO> said it will produce about 1
million ounces in 2010 from 939,000 ounces last year and
Russia's Highland Gold Mining <HGM.L> said it plans produce 25
percent more this year. [] []
Among other precious metals, silver <XAG=> was bid at $16.50
an ounce against $16.68. Platinum <XPT=> was bid at $1,567.50 an
ounce versus $1,576.50, while palladium <XPD=> was at $440.50
against $439.50.
U.S. auto sales rose 6 percent from a year earlier data
showed on Tuesday, powered by revived purchases by rental car
companies which had dropped out of the market a year earlier due
to tight credit and concerns about a deepening slump in the
economy. []
Carmakers are the biggest consumers of platinum and
palladiums, which are used in autocatalyst manufacturing. A
slump in car demand last year casued prices to tumble.
(Additional reporting by Veronica Brown; Editing by Keiron
Henderson)
