* 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 a record high above
$1,095 an ounce on Wednesday as dollar weakness added to
momentum triggered by India's purchase of 200 tonnes of gold
from the IMF.
Gold is now poised to target the psychological $1,100 an
ounce level, dealers said.
Spot gold struck a high of $1,095.40 an ounce and was bid at
$1,094.10 an ounce at 1552 GMT, against $1,084.50 late in New
York on Tuesday.
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. []
"India has (prompted) new speculation of pent-up demand for
gold diversification by central banks," said Michael Lewis, head
of commodities research at Deutsche Bank.
"There is a long list of central banks which have very low
gold reserve ratios, and in aggregate central banks should be
net buyers of gold over the next year for the first time in 20
years."
Market watchers are now speculating over the destination of
the remaining 403 tonnes of gold the IMF has to sell.
Weakness in the dollar has added to this momentum, dealers
said. The dollar index retreated from a one-month high on
Wednesday as traders braced for a policy decision from the
Federal Reserve. []
It extended losses against the euro as stock markets added
to gains following U.S. ISM services data, which dampened the
U.S. currency's safe-haven appeal.
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.
RECORD HIGHS
U.S. gold futures on the COMEX division of the New York
Mercantile Exchange also hit record highs at $1,096.50 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=> rose more
than 2 percent to a peak of $17.59, tracking gains in gold,
against $17.20. Platinum <XPT=> was at $1,370 an ounce against
$1,355.50.
Palladium <XPD=> rose 2 percent to a peak of $331.50 after
stronger than expected U.S. car sales numbers late on Tuesday,
before retreating to $330 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."
For timeline on gold's climb to record highs, click on:
http://graphics.thomsonreuters.com/109/GLD/GLD_TMLN1009.html
(Editing by Sue Thomas)
