* Gold hits record highs but struggles to build on gains
* Silver at 2-1/2 year highs, nears 30-year peaks
* Investors eye Sept 21 Fed meeting for fresh direction
(Updates prices, adds comment)
By Amanda Cooper and Jan Harvey
LONDON, Sept 20 (Reuters) - Gold hit record highs for a
fourth day on Monday as speculation the Federal Reserve may
announce further moves to stimulate the U.S. economy after its
policy meeting this week piqued interest in the precious metal.
Spot gold <XAU=> hit a record $1,283.25 an ounce and was bid
at $1,281.20 an ounce at 1429 GMT, against $1,275.95 late in New
York on Friday. U.S. gold futures for December delivery <GCZ0>
rose $5.40 percent to $1,282.90 an ounce.
Concern over U.S. economic growth has sparked talk that the
Fed may signal a move towards further quantitative easing, which
could potentially prove inflationary.
It has also raised expectations that interest rates will
stay low, undermining the dollar and cutting the opportunity
cost of holding non-interest bearing gold. []
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"All the stories stack up hugely in favour of gold
currently," said Saxo Bank senior manager Ole Hansen. "A move
higher to between $1,300-1,350 could be a good target towards
year-end, but it will come in steps."
The precious metal is likely to consolidate for the time
being, he said, as investors await fresh news on the outlook for
the global economy, and on U.S. monetary policy.
"For now, the potential is for us to step back a bit to test
the strength of this recent rally, especially given all the
positive news that is already in the market, and that the market
has had a chance to react to," he said.
Confidence in the U.S. recovery is fragile, with data on
Friday showing Americans were at their most pessimistic in over
a year this month as growing fears about job security and
finances undermined U.S. consumer sentiment.
This has added to conjecture that the Fed may be considering
further measures to stimulate economic growth.
"The pressure on the U.S. central bank is gradually building
and such a move would be supportive for gold as monetary base
expands further and the dollar weakens," said Andrey
Kruychenkov, an analyst with VTB Capital, in a note.
16 PCT AND CLIMBING
Spot gold prices have risen by more than 16 percent this
year, driven by the desire among investors for a safe store of
value in light of major currencies, equities and bonds becoming
increasingly volatile.
Reflecting keen investor interest in bullion, the world's
largest gold exchange-traded fund, the SPDR Gold Trust <GLD>,
said its holdings rose another 6 tonnes on Friday. []
Holdings of the world's largest silver-backed ETF, the
iShares Silver Trust <SLV>, also rose on Friday, by 38.05 tonnes
to 9,381.74 tonnes. []
Silver prices, which have risen by 17 percent in the last
five weeks alone, were less than 1.5 percent below their highest
level in nearly 30 years on Monday.
Silver has acted as a cheap alternative to gold for
investors who have sought out safe-haven assets in which to park
their cash, but has also drawn strength from the modest recovery
in global growth.
"Silver appears to be doing better than gold at the minute
on the back of a combination, not just investment demand, but
also industrial demand as the cycle improves for all the
electronics companies," said Natixis strategist Nic Brown.
Spot silver <XAG=> rose as high as $20.96 an ounce, after
reaching $20.99 on Friday, its highest in the past 2-1/2 years.
It was later at $20.84 an ounce against $20.76 late on Friday.
The platinum group metals rose in line with gold. Platinum
<XPT=> hit its highest in four months at $1,631 an ounce, and
was later at $1,626.50 an ounce against $1,610.55 on Friday.
Palladium <XPD=> was at $541, against $539.88.
(Editing by Vera Eckert)
